HONG KONG: Asian markets were mixed Thursday after the Federal Reserve left open the possibility it could lift interest rates this year, while investors kept an optimistic eye on China-US trade talks.
Equities and other risk assets have enjoyed a stellar start to the year on hopes for the negotiations as well as expectations the US central bank will slow its pace of monetary tightening — with some even tipping a cut — as growth both at home and globally slows.
On Wednesday, the Fed minutes showed its policy board was concerned about the outlook and trade tensions, and said US growth would “step down” from last year’s rapid pace.
It also said it expects to continue to wind down its balance sheet of securities and other assets — which helps keep borrowing costs down — but added “it was not yet clear” what rate moves “may be appropriate later this year”.
The minutes showed there could be another hike if price pressures pick up.
Analysts said there was still a possibility of more increases in borrowing costs this year, after four in 2018.
“The debate is still focused on whether to tighten or not, and not whether to cut,” said Lou Crandall, chief economist at Wrightson ICAP LLC. “The risk is tilted in the direction of more tightening.”
In morning trade, Hong Kong was flat and Shanghai dipped 0.1 percent while Tokyo went into the break 0.1 percent lower.
Sydney rose 0.4 percent, Singapore slipped 0.2 percent and Seoul was off 0.3 percent. Wellington added 0.7 percent, Taipei was barely moved and Manila lost 0.5 percent.
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