Asian stock markets saw mixed results on Thursday as investors remained cautious about the U.S. interest rate outlook following strong inflation data, while South Korean stocks were subdued despite a surprise rate cut by the central bank.
Market sentiment was influenced by Wall Street’s performance, with U.S. stock benchmarks slipping from record highs due to robust economic indicators and losses in major technology stocks.
The U.S. Federal Reserve’s preferred inflation measure met expectations, and the economy showed solid growth in the third quarter. Wall Street futures were flat ahead of the Thanksgiving holiday.
Investor confidence was also shaken by President-elect Donald Trump’s threats of additional trade tariffs on China, potentially reigniting trade tensions between the two countries.
In Asia, China’s index dropped 0.4%, while Hong Kong’s index declined 1.2%. UBS analysts warned of near-term challenges for Chinese equities due to tariff uncertainties and limited domestic stimulus.
Elsewhere, Thailand’s index fell 0.3%, the Philippines’ index lost 0.8%, and India’s index indicated a muted start. However, Japan’s and indexes bucked the trend with gains of 0.6% and 0.5% respectively.
Bank of Korea cuts rates by 25 bps
South Korea’s central bank unexpectedly cut rates for the second consecutive meeting, citing a projected slowdown in economic growth. Seoul stocks were mostly flat, with technology shares like Samsung Electronics and LG Electronics experiencing declines.
The tech-heavy Index in South Korea also showed muted movement.
Investors assess US data for rate outlook
Recent U.S. data has tempered expectations for early 2025 rate cuts, with investors now anticipating unchanged rates at the January and March meetings. President-elect Trump’s policies are seen as inflationary, potentially leading to sustained higher interest rates.
While weekly jobless claims data was slightly above expectations, the Fed’s November meeting minutes indicated a gradual approach to rate adjustments. A 25 basis points cut is still anticipated at the December meeting.