Asian markets were in retreat Monday on dimming hopes for a deep interest rate cut by the Federal Reserve, but all the firms on a new tech-focused board in China rallied on its opening day.
Oil prices extended last week’s gains after Iran seized a British tanker in the Gulf, fuelling fresh concerns about supplies and a possible conflict in the tinderbox Middle East.
Traders took a step back after last week’s gains as the New York Federal Reserve tempered comments from its president, John Williams, who had suggested the central bank would cut borrowing costs by 50 basis points at its policy meeting this month.
“Stocks are on the back foot as the market pares expectations for how deep the Fed will cut rates,” said Neil Wilson, chief market analyst at Markets.com.
“Expectations for a 50 (point) cut are diminished and the market is now looking to the European Central Bank this week to see how dovish they go.” Bets that the Fed will only reduce rates by 25 points provided support to the dollar against most high-yielding, riskier currencies. On equity markets, Tokyo ended 0.2 percent lower and Hong Kong was off 1.4 percent.
Shanghai fell 1.3 percent, with liquidity hit as Chinese investors piled their cash into companies listed on the country’s new Nasdaq-style board. Twenty-five stocks debuted on the Shanghai Stock Exchange’s Sci-Tech Innovation Board—dubbed the STAR Market—in which listing and trading rules have been eased to help channel funding to start-ups. —AFP