Asian markets slip on Fed stimulus fears

Asian markets saw early losses Thursday following a tumble on Wall Street as traders grow concerned that the US Federal Reserve could bring an early end to its huge stimulus programme.

Minutes from the Fed’s most recent policy board meeting showed some members were in favour of cutting short the USUS$85 billion-a-month (HKUS$659 billion) bond-buying introduced last year to support the economy and which has helped lift global shares.

Tokyo fell 0.80 per cent by the break, Sydney lost 1.19 per cent, Seoul was off 0.33 per cent, Hong Kong slipped 1.33 per cent and Shanghai was 1.39 per cent lower. Investor sentiment in the China market was also dampened after China’s cabinet said late Wednesday that it would continue to strictly implement property control measures and expand property taxes to keep home prices in check, state media reported.

The Fed introduced a third round of its asset-purchase scheme, known as quantitative easing 3 (QE3), in September and said it would not take its foot off the pedal until unemployment had fallen and the economy was strong enough.

However, investor sentiment took a hit after the Fed minutes showed a “number” of board members said an ongoing evaluation of the easing “might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labour market had occurred”.

On Wall Street the Dow fell 0.77 per cent and the S&P 500 lost 1.24 per cent, with both markets having closed at more than five-year highs on Tuesday. The Nasdaq dropped 1.53 per cent.

The dollar surged against the euro in New York trade, with the single currency ending at US$1.3283, well down from US$1.3390 the previous day.

In Tokyo on Thursday the euro bought US$1.3285. The euro also sat at 124.50 yen compared with 124.37 yen in New York. The greenback fetched 93.67 yen, against 93.61 yen.

Qantas shares surged 4.15 per cent after a surge in six-month net profit for the airline, which banked A$125 million (HK$1.0 billion) in compensation from Boeing because of delays in the delivery of the Dreamliner.

Sony slipped 1.55 per cent in a muted response after it announced its long-awaited PlayStation 4 in New York without actually unveiling the console.

Oil prices were lower owing to a stronger dollar, with New York’s main contract, light sweet crude for delivery in April, shedding 49 cents to US$94.73 a barrel and Brent North Sea crude for delivery in April dropping 59 cents to US$115.01.

Gold was at US$1,559.90 at 0235 GMT, compared with US$1,595.20 late Wednesday.