Asian stocks retreat on lack of new Fed action

Stocks Bond Yields Drop as Recovery Risk Lingers Markets WrapMore

Stocks Bond Yields Drop as Recovery Risk Lingers Markets WrapMore

At 10:08 a.m. ET the Dow Jones Industrial Average was down 172.82 points, or 0.62%, at 27,859.56, and the S&P 500 was down 28.53 points, or 0.84%, at 3,356.96. The Fed also changed its forward guidance to reflect its more dovish stance on inflation, signalling that its benchmark interest rate could remain near zero through 2023.

The number of Americans applying for jobless benefits resumed its decline, while continuing claims fell by nearly 1 million in the week ended September 5. It had earlier been up by 369 points.

Tech stocks - which have spearheaded the robust market recovery from pandemic lows as more Americans took to their computers for work, socializing, and shopping - took a tumble on Thursday.

In Asia, the Shanghai Composite Index lost 0.4 per cent to 3,270.44 and the Nikkei 225 in Tokyo sank 0.7 per cent to 23,319.37.

The Bloomberg Dollar Spot Index declined 0.1 per cent to 1,163.81, reaching the lowest in more than two weeks on its fifth straight decline.

One of the primary reasons Wall Street has roared back to record heights this year despite the still-raging pandemic is the enormous aid from the Federal Reserve.

While the labor market has improved significantly since the spring, "It's a long way from maximum employment", Fed Chairman Jerome Powell told reporters Wednesday.

Economic data sparked concerns the economic recovery might be levelling off, in contrast to what the Fed had concluded might be a turning point in the economy based on recent improvements in economic conditions. Powell said the US economy has recovered more quickly than The Fed forecast the economy will shrink 3.7% this year, an improvement over its June outlook of a 6.5% drop. The Fed projected an unemployment rate at the end of the year of 7.6% instead of the 9.3% projected in June.

Still, Powell acknowledged the economic outlook remains highly uncertain and heavily dependent on the USA getting control of the pandemic.

Covid rules eased in parts of Victoria, lowest cases since June
Hundreds died in aged care homes as the virus swept through facilities, infecting thousands of residents and staff. All Victorians must wear a face covering when they leave home, no matter where they live .

Forecasters warn, however, that the market rise might be too big and fast considering the uncertain economic outlook.

The economy has improved fitfully since the worst of the lockdowns in the spring.

"Investors love when the Fed lowers rates, because they feel that's good for market", Dollarhide said.

Federal unemployment benefits and other congressional aid for the economy approved earlier this year have expired, and partisan disagreements on Capitol Hill have prevented their renewal. Part of the shortfall is probably because unemployed workers are no longer getting the $600 boost to their weekly checks that had been coming from the federal government. The dollar gained to 105.07 yen from Wednesday's 105.01 yen.

USA stock futures were soft, with S&P 500 futures down 0.2%, though Nasdaq 100 futures turned positive by the middle of the Asia session to trade 0.07% higher.

Among the gainers was Herman Miller, which jumped 30.5% after reporting much stronger profit for its latest quarter than analysts expected. The boom in online shopping caused by the COVID-19 pandemic has helped lift its revenue.

Treasury yields dipped following the retail sales report but inched higher after the Fed statement. The yield on the 10-year Treasury fell to 0.68% from 0.69% late Wednesday.

Stocks in markets around the world were also weak. New Zealand and Southeast Asia markets all retreated.

The contract rose $1.88 on Wednesday to $40.16.

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