Asian stock markets saw declines on Friday, reflecting Wall Street’s downturn and growing concerns over economic data that could signal a slowdown. U.S. futures and oil prices remained relatively unchanged.
The drop in Asian markets came after a two-day economic policy meeting concluded in Beijing on Thursday. Chinese leaders had been expected to announce measures to stimulate the economy, but the meeting’s readouts offered limited details. State media reported that the government plans to increase borrowing for further spending and ease credit conditions to encourage investment and consumption. However, the lack of concrete actions left investors wanting more, especially given the uncertainty surrounding U.S. tariff policies.
“Chinese authorities have been in a reactionary policy mode, hesitant to make significant commitments due to ongoing uncertainty over U.S. tariff strategies,” said Yeap Jun Rong, market analyst at IG.
In Hong Kong, the Hang Seng Index fell 2% to 19,994.25, with the Hang Seng Properties index dropping 2.7%. The Shanghai Composite also slipped 2%, ending at 3,391.88.
Japan’s Nikkei 225 dropped 1% to 39,47.44, despite a Bank of Japan survey revealing stronger-than-expected business sentiment among large manufacturers in the fourth quarter. However, the overall results were still seen as underwhelming.
In other parts of Asia, Australia’s S&P/ASX 200 fell by 0.4% to 8,296.00, while South Korea’s Kospi rose by 0.5% to 2,494.46.
Meanwhile, U.S. markets experienced losses on Thursday. The S&P 500 dropped 0.5% to 6,051.25, marking its fourth decline in six days, while the Dow Jones Industrial Average also lost 0.5%, closing at 43,914.12. The Nasdaq Composite dropped 0.7% to 19,902.84.
Concerns about the economy were fueled by a report showing a higher-than-expected number of U.S. unemployment claims and stronger-than-anticipated inflation at the wholesale level. While neither report signaled immediate alarms, they tempered hopes that the Federal Reserve would continue cutting interest rates. The prospect of further rate cuts has been a key factor in the S&P 500’s strong performance this year, with the index hitting 57 all-time highs.
Traders are widely anticipating a third consecutive rate cut by the Fed at its meeting next week. Since beginning its rate reductions in September from a two-decade high, the Fed has been aiming to support a slowing job market and keep inflation near its 2% target. However, lower rates could also add pressure to inflation, potentially complicating the economic outlook.
The Fed’s expected move follows similar actions by other central banks. The European Central Bank reduced its rates by a quarter percentage point on Thursday, while the Swiss National Bank made a steeper cut of half a percentage point. Both decisions were influenced by global economic uncertainties, including concerns over U.S. President-elect Donald Trump’s impact on trade policies.
In early trading on Friday, U.S. benchmark crude oil rose by 12 cents to $70.14 per barrel, while Brent crude edged up by 1 cent to $73.42 per barrel. The U.S. dollar strengthened against the Japanese yen, rising to 152.88 from 152.55 yen, while the euro weakened slightly, falling to $1.0462 from $1.0472.
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