Futures pointed to a lower start for Asia on Thursday, tracking losses on Wall Street after the Federal Reserve released its March Federal Open Market Committee (FOMC) minutes which was viewed as hawkish.
Last month’s FOMC minutes reflected Fed officials’ intention to unwind the central bank’s balance sheet later in the year if economic data continues to hold up. The Fed currently holds $4.5 trillion in bonds and actions to trim the balance sheet could have a major impact on markets given its magnitude. Fed Chair Janet Yellen indicated that such a move would be akin to a rate hike.
“The reaction here has been quite punchy and it’s interesting that there were no real discussions about a lesser need to hike rates if the balance sheet is also being used as a policy tool – a theme Bill Dudley has been pushing of late,” said Chris Weston, chief market analyst at spread-better IG, in a Thursday note.
Meanwhile, ADP payrolls data showed that 263,000 workers were added in March, higher than market expectations of 185,000. This was also the most number of jobs added since December 2014, suggesting tightening in the U.S. labor market.
Nikkei futures in Osaka were down by 0.32 percent, at 18,800, against the Nikkei 225’s last close at 18,861.27. Nikkei futures in Chicago were lower by 0.25 percent at 18,815. Australian SPI futures were fell 0.56 percent at 5,843.0 against the benchmark index’s last close at 5,876.197.
Traders are also expected to focus on the highly-anticipated meeting between President Donald Trump and Chinese President Xi Jinping, later in the day in Florida.
Stateside, all three major U.S. indices closed in the red, with the Dow Jones industrial average and S&P 500 recording their largest one-day reversals since February last year. The Dow closed 0.2 percent lower, at 20,648.15, while the S&P was lower by 0.31 percent to 2,352.95, led by the financials play. The Nasdaq closed 0.58 percent at 5,964.48.
In corporate news, Toshiba reportedly sacked the chairman of Westinghouse Electric, its U.S. nuclear subsidiary, before the latter filed for bankruptcy last week. The Japanese conglomerate faces billions of dollars in losses due to massive cost overruns incurred by Westinghouse.
In Australia, miner Glencore declared force majeure on coal shipments after Cyclone Debbie hit the northeastern state of Queensland, damaging a railway pass that connected coal mines to ports. Four other miners in the region, including the world’s largest coking coal shipper BHP Billiton, have declared force majeure, Reuters reported.
On the energy front, oil prices eased after nearing one-month highs as supply outages in the North Sea were offset by an increase in U.S. crude inventories.
Brent futures settled up 0.4 percent to $54.36 a barrel during U.S. hours on Wednesday while U.S. crude added 0.2 percent $51.15.
In FX markets, the dollar was weaker at 100.48 against a basket of major currencies, compared to a session high at 100.85. The dollar/yen was lower for the fifth consecutive session at 110.51 as the yen strengthened on safe-haven buying. The Australian dollar was steady at $0.7568, but still lower compared to levels around $0.76 seen before the RBA decision to hold policy on Tuesday.
On the economic data calendar, China will report its Caixin market services Purchasing Managers’ Index (PMI), Japan’s March consumer confidence is also on tap, followed by the Reserve Bank of India’s monetary policy decision due later.
Markets in Thailand and Vietnam are closed for public holidays.