Asian Shares Mixed As Fed Sounds Hawkish On March Rate Cut

(RTTNews) - Asian stocks turned in a mixed performance on Thursday as the U.S. Federal Reserve sought to temper expectations on rate cuts and China reported mixed economic data.

A cautious undertone prevailed after the Fed kept key rates unchanged but indicated that cuts to interest rates are not imminent in view of elevated inflation.

A private survey showed activity in China's manufacturing sector continued to grow in January, thanks to stable growth in output, quicker logistics and the first rise in new export orders since June.

On the flip side, the sharp slowdown in China's home sales dragged on in January, piling pressure on policymakers to step up efforts to arrest the slump.

China's Shanghai Composite index fell 0.64 percent to 2,770.74 amid persisting signs of economic weakness in the country.

Hong Kong's Hang Seng index rose 0.52 percent to 15,566.21 following a two-day plunge as data showed Hong Kong's economy expanded at a faster pace at the end of the year.

Japanese markets fell notably while the yen strengthened as the Bank of Japan laid the ground for an end to its negative-rate policy and hopes for early rate cuts in the U.S. receded.

The Nikkei average dropped 0.76 percent to 36,011.46, snapping a three-day winning streak. The broader Topix index settled 0.67 percent lower at 2,534.04, with insurance, rubber product and machinery shares pacing the decliners.

In economic releases, a survey revealed that business conditions across the Japanese manufacturing sector deteriorated at a modest rate in the start of 2024.

Seoul stocks posted strong gains, with auto, tech and financial shares leading the surge. The Kospi average jumped 1.82 percent to 2,542.46 after a survey showed factory activity in the country increased in January for the first time in 19 months. Australian markets fell sharply after reaching a record high in the previous session. The benchmark S&P ASX 200 fell 1.20 percent to 7,588.20, with mining, tech, energy and financial stocks leading losses. The broader All Ordinaries index closed 1.19 percent lower at 7,818.80.

Tech major Xero hit its lowest since Jan. 18 before closing 1.3 percent lower. Origin Energy shed 1.2 percent as the power retailer announced the retirement of its Chief Financial Officer Lawrie Tremaine.

On the data front, activity across Australia's manufacturing sector stabilized in January, while the total number of dwellings approved fell 9.5 percent in December, separate reports revealed.

Across the Tasman, New Zealand's benchmark S&P NZX-50 index rose 0.38 percent to 11,916.78.

U.S. stocks tumbled overnight as Alphabet and Microsoft forecast rising artificial intelligence costs, ADP private sector jobs data disappointed and the Fed dashed investor hopes for a March rate cut amid 'elevated' inflation.

The tech-heavy Nasdaq Composite plunged 2.2 percent, the S&P 500 slumped 1.6 percent and the Dow dropped 0.8 percent.