Asian share markets fell on Thursday after minutes from the Federal Reserve'sFederal Reserve's early May meeting showed a majority backing half-percentage rate hikes in June and July, and as persistent concerns over global growth sapped confidence.
While the minutes highlighted policymakers' faith in the strength of the U.S. economy, it helped lift the mood on Wall Street overnight, sentiment in equity markets remains fragile after weeks of volatile trade as more central banks continue to tighten their positions.
I don't think that the global economy is slowing down, I think we are at the risk of a slow down. Barbara Ann Bernard, CIO of Wincrest Capital, said today that the potential for good investments is predominately on the short side.
South Korea's central bank raised interest rates for the second consecutive meeting on Thursday, as it grapples with consumer inflation at 13 year highs.
The Fed's May 3 -- 4 meeting supported a half-percentage increase - the first of that size in more than 20 years - and most participants judged that further hikes of that magnitude would be appropriate at the Fed's policy meetings in June and July, according to minutes from the meeting.
The minutes showed agreement among policymakers on the strength of the U.S. economy, tightness of the labour market, high inflation, the Ukraine war, and the continued coronaviruses lockdowns in China, and continued coronaviruses lockdowns in the Asia-Pacific area, which dragged MSCI's broadest index of Asia-Pacific shares outside Japan down 0.54% after trading higher early in the morning.
Chinese blue-chips fell 1.11% despite a drop in daily COVID 19 cases in the country, where lockdowns aimed at curbing the spread of the disease threaten to undermine recent economic support measures.
The Premier Li Keqiang said on Wednesday that China will strive to achieve reasonable economic growth in the second quarter and stem rising unemployment.
Seoul's Kospi was 0.25% higher after the central bank rate announcement came in line with expectations.
The falls in Asia contrast with a more optimistic mood on Wall Street, where the Dow Jones Industrial Average went up 0.6%, the S&P 500 gained 0.95% and the Nasdaq Composite 1.51%.
Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey, said that the market is looking to stabilize and looking a little bit forward to the point where the Fed can issue some different guidance and that the economy has slowed enough to not see the need to raise rates.
The dollar was little changed in Asia trade after rising on Wednesday after the Fed minutes. It was barely changed against the yen at 127.27, while the euro gained 0.11% to 1.0692%.
The dollar index, which tracks the dollar against a basket of major peers, was just 0.03% lower at 102.02.
The moves in the U.S. Treasury yields were muted. The 10-year yield went up to 2.7577% from a close of 2.747%, and the policy-sensitive two-year yield was flat at 2.506%.
After a cautious rally this week, crude oil was steady, with Brent crude flat at $114.03 per barrel and U.S. crude up 0.13% at $110.47.
Spot gold was down 0.2% at $1,849. The ounce is 19 per ounce.