Asian Shares Mixed Despite Fed Boost

Asian stocks ended mixed on Friday as concerns about the Japanese Prime Minister’s chronic health issues as well as political deadlock in the U.S. over federal stimulus spending offset the U.S. Federal Reserve’s dovish gesture to achieve inflation averaging 2 percent over time.

U.S. House Speaker Nancy Pelosi said that Democrats and Republicans continue to have differences over how much to spend on the next coronavirus relief legislation.

Chinese stocks rose sharply on hopes of an economic recovery and optimism surrounding a surge in new start-up listings.

The benchmark Shanghai Composite index rallied 53.69 points, or 1.6 percent, to 3,403.81, while Hong Kong’s Hang Seng Index gained 0.6 percent to end at 25,422.06.

Meanwhile, Japanese shares tumbled after reports suggested Prime Minister Shizo Abe intends to resign due to health reasons.

The Nikkei 225 Index tumbled 326.21 points, or 1.4 percent, to 22,882.65, while the broader Topix closed 0.7 percent lower at 1,604.87.

Exporters finished broadly lower as the yen rallied on concerns about political uncertainty. Financials gained ground after 10-year U.S. bond yields hit a 3-1/2-month high in reaction to the Fed’s new monetary policy strategy.

Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial, T&D Holdings and Dai-ichi Life Holdings climbed 2-4 percent.

Australian markets fell sharply as nine areas in the state of Victoria reported an increase in coronavirus cases and a former Fed official said there’s still a possibility that the U.S. economy will experience a “double dip.”

The benchmark S&P/ASX 200 Index dropped 52.40 points, or 0.9 percent, to 6,073.80, while the broader All Ordinaries Index ended down 49.80 points, or 0.8 percent, at 6,260.80.

Mining heavyweights BHP and Rio Tinto fell around 2 percent. Newcrest Mining and Evolution Mining fell over 2 percent after bullion prices slumped overnight on the Fed’s new inflation shift. Regis Resources shares slumped 4.6 percent.

Tech stocks followed their U.S. peers lower. Afterpay lost 2.8 percent and Appen nosedived 10.4 percent.

Financials bucked the weak trend, with banks ANZ, NAB and Westpac rising between 0.4 percent and 0.9 percent.

Electronics retailer Harvey Norman Holdings declined 1.6 percent despite the company reporting record full-year earnings.

Seoul stocks finished higher as authorities stopped short of shifting the country up to the highest level of social distancing measures but instead extended the current Phase 2.

The benchmark Kospi rose 9.35 points, or 0.4 percent, to 2,353.80 as the finance minister said the government will consider drafting its fourth supplementary budget of this year should the economic fallout from the pandemic significantly worsen.

New Zealand shares eked out modest gains to end higher for the sixth straight day. The benchmark NZX 50 Index inched up 40.09 points, or 0.3 percent, to 12,093.52.

Exchange operator NZX halted trading for most of the session as the bourse crashed for a fourth day due to connectivity issues.

U.S. stocks fluctuated before closing mostly higher overnight as Fed Chair Jerome Powell announced a major policy shift to “average inflation targeting,” meaning the Fed is willing to allow inflation to run higher than the standard 2 percent target before hiking interest rates.

The Fed also adjusted its view of full employment to allow labor-market gains to reach more workers.

The S&P 500 edged up 0.2 percent to a fresh record closing high and the Dow Jones Industrial Average rose 0.6 percent to end at its best closing level in over six months, while the tech-heavy Nasdaq Composite shed 0.3 percent.

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