Asian markets pull back ahead of release of Fed minutes


Asian shares fell Wednesday, tracking a decline on Wall Street that was led by big technology stocks. Investors are awaiting the release of minutes from the latest Federal Reserve policy setting meeting.

Japan’s Nikkei 225

sank 1.4%, with Toyota

and Rakuten

declining. Australia’s S&P/ASX 200

fell 1.8% as the country’s wage price index rose more than expected in the first quarter. The Shanghai Composite

declined 0.4%, while stocks ticked higher in Shenzhen
Taiwan’s Taiex

made slight gains, while markets in Singapore

and Indonesia

retreated. Markets in Hong Kong and South Korea were closed for holidays.

“Major U.S. markets ended the day lower, as investors took some risk off the markets ahead of the Fed minutes release later today,” said Yeap Jun Rong, market strategist at IG in Singapore. “Asia markets are set to track the U.S. indexes lower.”

A day after Japan reported its economy contracted at a 5.1% annual rate in the first quarter of this year, Fitch Solutions forecast the economy will grow 2.5% this year, highlighting the challenge as the country battles surging coronavirus infections.

“The slow vaccination roll-out in the country means that the country continues to face risks from sporadic movement restrictions and other tightening measures that will disrupt a healthy recovery in activity,” the report said.

The Tokyo Olympics, due to start in late July, will be held in such a reduced capacity, “the positive economic gains from the event will likely be negligible,” it said.

Stocks closed lower on Wall Street as a late-afternoon sell-off in technology companies helped nudge stock indexes into the red for a second straight day.

The Dow Jones Industrial Average 

 fell by 267.13 points to close at 34,060.66, while the S&P 500

 ended with a loss of 35.46 points at 4,127.83, and the Nasdaq Composite 

 slipped 75.41 points to finish at 13,303.64.

The broader market made solid gains early in the year as investors bet on an economic recovery fueled by widespread vaccinations. Expectations were high for corporate earnings and the latest round of results has been surprisingly good. Wall Street is now digesting that growth and shifting to a more cautious view.

“Some sort of pause was always inevitable,” said Ross Mayfield, investment strategist at Baird. “Eventually markets see a more challenging landscape ahead and general uncertainty.”

A big question is whether rising inflation will be temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.

The fear is that the Federal Reserve will have to dial back its extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy. For all the worries about inflation, however, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to be “transitory.”

Higher interest rates drag on most of the stock market, but they are particularly painful for stocks, especially technology shares, considered the most expensive and those bid up for profits expected far into the future.

In energy trading, benchmark U.S. crude

 fell 77 cents to $64.72 a barrel. Brent crude 
 the international standard, lost 79 cents to $67.92 a barrel.

In currency trading, the U.S. dollar 

edged down to 108.95 Japanese yen from 109.15 yen.

MarketWatch contributed to this report.

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