Asian shares declined early Friday after the Federal Reserve cited concerns about global economic growth in its decision to hold off on its first rate hike in nearly a decade.
“In the grand scheme of things, the decision by the Fed to leave rates unchanged is indicative that the global economy and the US economy is performing worse than previously projected,” IG’s market analyst Angus Nicholson wrote in a note.
Wall Street indexes gave up a 1-percent rally to end mostly lower overnight. The blue-chip Dow Jones Industrial Average and the S&P 500 slipped 0.4 and 0.3 percent respectively, while the Nasdaq Composite inched up 0.1 percent.
Nikkei loses 1.7%
Japan’s Nikkei 225 index and the broader Topix index accelerated declines at the start of trade.
Financials endured particularly heavy selling, with Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group tanking more than 2 percent.
Given that dollar-yen is near 119.98 compared to the previous session’s 120.90 , exporters kicked off Friday on the back foot. Blue-chip names Toyota Motor and Canon eased 2 percent each, while Panasonic slumped 2.4 percent.
Meanwhile, the Bank of Japan (BOJ) is set to release minutes of its policy meeting held earlier this week. The BOJ kept monetary policy steady on Tuesday, in line with expectations.
ASX drops 0.8%
Australia’s S&P ASX 200 index notched down, with financial and energy counters leading declines.
National Australia Bank, Westpac and Australia and New Zealand Banking shed 0.7 percent each. Santos and Oil Search lost 1 percent each after West Texas Intermediate (WTI) eased 25 cents at USD 46.90 after the Fed’s decision.
The Australian dollar hit a three-week high of USD 0.7277 against the dollar following the policy announcement, but has since retreated back to USD 0.7178. In a testimony before parliament on Friday, Reserve Bank of Australia Governor Glenn Stevens said he is not especially concerned by the prospect of higher US interest rates and expects a rate hike before the end of 2015.
Kospi sheds 0.2%
South Korea’s Kospi index also succumbed to the downbeat sentiment in early trade, but got off lightly compared to regional peers.
Banking shares tracked the region-wide sluggishness; Shinhan Financial Group and Woori Bank plunged 3.5 and 2 percent respectively.
Heavyweight components also weighed on the bourse, as Samsung Electronics and Hyundai Motor skidded more than 1 percent each.
Meanwhile, attention in the region may turn to the release of China’s house price index for August at 9.30am local time.