Asia-Pacific stocks were hit hard on Thursday, posing the worst day in a month, after the Federal Reserve minutes raised concerns regarding U.S. recovery and amid elevating tensions between the U.S. and China.
The MSCI Asia-Pacific index excluding Japan slipped 1.75 percent today, the sharpest daily fall in five weeks, as the Fed minutes highlighted uncertainty to U.S. recovery amid the spread of the Covid-19.
The current pandemic “would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term,” Fed officials said in the minutes.
Committee members’ comments also showed skepticism about the usage of bond purchases to control the government bond yield curve.
In Hong Kong, the Hang Seng Index plunged 1.41 percent to 24,823.26, as the U.S. deferred its extradition accord and reciprocal tax treatment agreement with Hong Kong.
This latest action from the U.S. against China sent the CSI 300 index lower by 1.30 percent to 4,679.15.
However, South Korea’s Kospi index reported the biggest drop with 3.66 percent decline to 2,274.22 after the rise in corona cases to 288 in South Korea.
Australia’s S&P/ASX 200 finished 0.77 percent down at 6,120.00, and Japan’s Nikkei 225 index slumped 1.0 percent to 22,880.62 points.
Adding more bearishness to the sentiment, the U.S. urged that all United Nations sanctions against Iran to be re-imposed.
On the upside, there are rising hopes that the U.S. Congress would agree on the terms of the new fiscal stimulus that targets aiding Americans financially affected by the pandemic.
Later in the day, eyes will focus on the U.S. weekly unemployment benefits to assess the health of the labor market.
The dollar index
traded slightly lower at 92.90, following its overnight gains after dovish
remarks from Fed officials.