Several Asian stock benchmarks declined as markets absorbed the news that major economies’ policymakers are taking a cautious approach to interest rate cuts.
Adding to market concerns, geopolitical tensions escalated as China initiated two days of military drills around Taiwan, termed “punishment” exercises, shortly after Taiwan’s new President Lai Ching-te assumed office.
This development led to a 0.9% drop in Chinese blue chips and a 1.4% decrease in Hong Kong’s Hang Seng Index.
Elsewhere, the MSCI’s broadest index of Asia-Pacific shares outside Japan dipped by 0.3%, and Australia’s S&P/ASX 200 index fell by 0.5%, also affected by a decline in some commodity prices.
Investors scaled back their expectations for global interest rate cuts following more hawkish minutes from the Federal Reserve’s latest meeting, higher-than-expected UK inflation, and a grim analysis of New Zealand’s inflation issues by its central bank.
In the United States, the S&P 500 fell by 0.3% to 5,307.01, the Nasdaq Composite index decreased by 0.2% to 16,801.54, and the Dow Jones Industrial Average closed down 0.5% at 39,671.04.
