NEW YORK: Asian equities fell Thursday (Feb 20) after Federal Reserve minutes showed fresh caution on interest rate cuts and President Donald Trump called for more tariffs.
Shares across Asia Pacific dropped while mainland China and Hong Kong benchmarks opened lower. US equity index futures declined in a sign the S&P 500 will pare much of its Wednesday gains. Treasuries were steady in early trading and gold held near a record, underpinning demand for haven assets.
Fed minutes showed policymakers in January expressed a readiness to hold interest rates steady amid stubborn inflation and economic-policy uncertainty. Officials also revealed pausing or slowing the balance-sheet runoff - a process known as quantitative tightening, or QT, until the government’s debt-ceiling drama is resolved.
"They will sit and wait before cutting again,” said Peter Boockvar, author of The Boock Report. "I say ‘cut’ because it still seems like they have an easing bias. The Fed also commented on the balance sheet. This could also be a reason why yields dipped a bit.”
Downward pressure on Japanese equities partly reflected a stronger yen. The currency rallied for a second day against the greenback to trade around 151 per dollar. An index of the US currency was slightly lower after climbing in the prior session.
Financial markets appeared unfazed by comments from President Donald Trump late on Wednesday in the US, which touched on efforts to cut government spending and further work to be done on tariffs. He also touted the Nasdaq, Dow Jones and Bitcoin gains in the last few months.
Bitcoin was a popular so-called Trump trade and soared to a record high in the months following November’s US election but has since fallen around ten per cent from a peak in January.
The Australian dollar rose after data showed more jobs were added to the economy than anticipated.
In Asia, data set for release Thursday includes export orders for Taiwan, inflation for Hong Kong. Separate one-year medium-term lending facility data for China may be released anytime through Feb. 25.
The latest China data will come after the country recorded the weakest start for inbound investment in four years, with just over US$13 billion in new spending by foreign firms in the country in January.
Investors will also be focused on Alibaba Group Holding Ltd., which faces a key test in its earnings presentation Thursday after a DeepSeek-sparked rally added more than US$110 billion to its market value.
Elsewhere in the region, Rio Tinto Group posted a slide in annual profit, while Fortescue Ltd. reported a 53 per cent drop in first-half profit, reflecting a decline in iron ore prices as Chinese demand has weakened.
US economic data released Wednesday showed housing starts slowed in January as builders pulled back on single and multifamily home construction.
Treasuries were steady in early Asian trading after gains in the prior session. The Bloomberg Dollar Spot Index was little changed after rising 0.2 per cent Wednesday.
Oil prices steadied Thursday after gaining in the prior session against the backdrop of uncertainties about crude supplies from Russia, Kazakhstan and OPEC+. - Bloomberg
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