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ASIA-MARKETS-UPDATE
Asian markets down after Fed hike, Trump China comments
HONG KONG, Sept 27, 2018 (BSS/AFP) – Most Asian markets fell Thursday as investors considered the prospect of more US interest rate hikes and Donald Trump’s latest broadside in his trade war with China.
And Hong Kong property firms took a hit after three of the city’s biggest banks raised their own rates for the first time in 12 years as a result of the Fed’s move.
The US central bank moved for the third time this year, as expected, citing an increasingly strong economy and jobs market, with governor Jerome Powell saying he saw no vulnerabilities in the financial system.
The post-meeting statement removed mention of being “accommodative”, which was seen as symbolically important as observers said it indicated the bank is moving away from the days of lower rates.
While Powell said this did not mean the Fed would tighten policy more quickly, the bank is widely expected to lift rates again in December, while analysts are betting on another three in 2019.
Powell also said there remained risks from trade tensions, which could lift inflation, but added it was too soon to tell what impact it would have.
After the meeting, Wall Street’s three main indexes fell and the dollar edged up on the prospect of higher rates through the year.
Tokyo led losses, ending down one percent, while Sydney lost 0.2 percent, Mumbai eased 0.2 percent and Wellington shed 0.7 percent. Singapore, Manila and Bangkok were also off, but Taipei and Seoul rose.
Hong Kong reversed early gains to end 0.4 percent lower while Shanghai shed 0.5 percent, Taipei gained 0.3 percent and Sydney was flat.
In early trade London fell 0.3 percent, Paris gave back 0.2 percent and Frankfurt shed 0.5 percent.
– Hong Kong rates rise –
Trump ramped up his criticism of China on Wednesday, accusing it of trying to sway November’s mid-term elections against his Republican party because of the trade row and admitting his relationship with President Xi Jinping may have been permanently damaged.
His comments will do little to ease concerns about an all-out trade war between the two economic giants, which have exchanged tariffs on hundreds of billions of dollars worth of goods, with no sign of a let-up in hostilities.
On oil markets, both main contracts jumped more than one percent after US energy secretary Rick Perry pushed back against speculation the government could tap its emergency stockpiles in order to lower prices.
Crude is at around four-year highs after OPEC and other key producers decided against lifting output, despite being urged to do so by Trump.
In Hong Kong, HSBC, Hang Seng Bank and Standard Chartered Bank lifted lending rates for the first time since 2006 after the city’s de facto central bank raised its benchmark in line with the Fed owing to the US dollar peg.
The news fuelled concerns about a hit to Hong Kong’s famously hot property market — the world’s most expensive — as years of ultra-cheap cash come to an end.
Costs had not been raised by lenders owing to a huge pile of cash swirling around in Hong Kong’s financial system, which meant they had easy access to money.
However, with much of that cash now having been soaked up by the HKMA to support the weakening local dollar, a rise in rates had been on the cards.
“The ultra-low interest rate environment in Hong Kong will be over as rates are now on an uptrend,” the city’s Financial Secretary Paul Chan said, warning that “higher interest rates will add to the burden of homeowners with mortgages”.
Among property stocks Sino Land fell more than one percent, Country Garden dived 2.5 percent, New World Development was 1.1 percent lower and Sun Hung Kai Properties slipped 0.8 percent. HSBC was 0.2 percent off.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: DOWN 1.0 percent at 23,796.74 (close)
Hong Kong – Hang Seng: DOWN 0.4 percent at 27,715.67 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,791.77 (close)
London – FTSE 100: DOWN 0.1 percent at 7,504.73
Euro/dollar: DOWN at $1.1704 from $1.1743 at 2100 GMT
Pound/dollar: DOWN at $1.3111 from $1.3169
Dollar/yen: DOWN at 112.60 yen from 112.74 yen
Oil – West Texas Intermediate: UP 92 cents at $71.49
Oil – Brent Crude: UP 92 cents at $82.26 per barrel
New York – Dow Jones: DOWN 0.4 percent at 26,385.28 (close)
BSS/AFP/HR/1440