Asian markets fall as Fed reminds of rate hike

AFP and AP

HONG KONG/TOKYO–Global shares fell Thursday after oil prices plunged and the U.S. Federal Reserve issued a reminder it is still on track to raise interest rates this year. The release of weaker-than-expected retail sales figures in Japan was another reason for gloom. Germany’s DAX fell 0.4 percent to 10,663.54 and France’s CAC-40 lost 0.7 percent to 4,576.85. Britain’s FTSE 100 fell 0.8 percent to 6,771.95. Wall Street looked set for gains after two days of losses. Dow futures were up 0.3 percent at 17,144 and S&P 500 futures added 0.2 percent to 1,994.70. The Federal Reserve issued its first policy statement of the year, making clear that it would remain ��patient�� in raising interest rates from near zero, which was expected. But it also strengthened its assessment of the U.S. economy, noting it is expanding at a solid pace and generating strong job growth.

��The fact is no one knows when a rate hike will occur,�� IG’s chief market strategist Chris Weston said in a commentary. ��And, while the Fed would like to be in a position to raise, the lessons of 1938 still haunt them: raising rates too early caused the second leg of the Great Depression.�� The 0.3 percent month-on-month drop in Japan’s retail sales in December may just reflect weaker gas prices, but core spending was also sluggish during one of the busiest shopping seasons of the year, economists said. The data adds to doubts about whether Prime Minister Shinzo Abe’s policies to revive the long stagnant Japanese economy are delivering the goods. A scathing report by Chinese regulators accusing e-commerce giant Alibaba of failing to prevent fake goods from being sold on its websites pushed its share price sharply lower. Further muddying the water was a disclosure that the report was delayed to avoid affecting Alibaba’s US$25 billion New York stock market listing. Alibaba’s shares fell 4.5 percent Wednesday.

Asian stock markets fell across the board Thursday, largely on the back of declines in the U.S. triggered by concerns over a strengthening dollar and falling oil prices. The Federal Reserve, meanwhile, failed to buoy markets when it repeated its pledge to remain ��patient�� regarding the United States’ first interest rate increase since 2006, signaling a June move remains in play. Tokyo shares dropped 1.06 percent, or 189.51 points, to close at 17,606.22. Seoul declined 0.54 percent, or 10.56 points, to finish at 1,951.02. Hong Kong lost 1.05 percent and Shanghai fell 1.11 percent in afternoon trading.