Benchmarks in Shanghai, Hong Kong, Australia and Tokyo all tumbled.
The Federal Reserve’s quarter-point cut, its first in a decade, was widely expected. But Chairman Jerome Powell disappointed investors by saying at a news conference the central bank had no plans for a long cycle of lowering interest rates. He called Wednesday’s cut a “midcycle adjustment.”
Powell was “less dovish than expected,” said Jingyi Pan of IG in a report. Pan said market declines reflect “significant disappointment” that the Fed wasn’t “embarking on the beginning of a rate cut cycle.”
The CME Fedwatch Tool, operated by CME Group Inc., said investors expect only one more U.S. rate cut of one-quarter point this year, down from previous expectations of two.
Powell’s comments “suggested that the Fed is largely undetermined in their next steps,” said Pan.
The Shanghai Composite Exchange lost 0.8% to 2,909.75 and Hong Kong’s Hang Seng shed 0.7% to 27,580.21. Sydney’s S&P-ASX 200 lost 0.3% to 6,793.20 and benchmarks in New Zealand, Taiwan and Southeast Asia also retreated.
South Korea’s Kospi gained 3 points to 2,028.44 and India’s Sensex was down 11 points at 37108.81.
On Wall Street, the Standard & Poor’s 500 index had its worst day in two months, falling 1.1% to 2,980.38. The index had hit an all-time high on Friday.
The Dow Jones Industrial Average lost 1.2% to 26,864.27. The Nasdaq composite fell 1.2% to 8,175.42.
Fed officials had signaled their readiness to take action to help shore up the U.S. growth, which faces threats from a tariff war with China.
Wednesday’s cut was the first since December 2008 during the global financial crisis, when the Fed slashed its rate to a record low near zero and kept it there until 2015. After that, the Fed went on to make nine quarter-point rate increases from December 2015 to December 2018.
The 10-year Treasury yield fell to 2.01% from 2.06% late Tuesday, a big move. The two-year yield, which is more influenced by the Fed’s movements, rose sharply to 1.86% from 1.83%.
SOUTH KOREAN TRADE: South Korean exports fell for an eighth month in July, declining 11% from a year earlier. The trade ministry blamed disruption caused by growing global trade disputes, including between China and the United States. It said falling global prices for memory chips also hurt Korean producers. Exports to China plunged 16.4% while sales to the United States were down 0.7%.
INDIAN MANUFACTURING: A gauge of Indian factory activity improved in July. The monthly purchasing managers’ index rose to 52.5 from June’s 52.1 on a 100-point scale on which numbers above 50 indicate activity expanding. Indian manufacturing has been in positive territory for two years. The improvement still should allow India’s central bank to cut interest rates at next week’s meeting of its leadership, said Darren Aw of Capital Economics in a report.
ENERGY: Benchmark U.S. crude fell 72 cents to $57.86 in electronic trading on the New York Mercantile Exchange. The contract gained 53 cents on Wednesday to close at $58.58. Brent crude, used to price international oils, lost 69 cents to $64.36 per barrel in London. It rose 42 cents the previous session to $65.05.
CURRENCY: The dollar gained to 109.18 yen from Wednesday’s 108.78 yen. The euro declined to $1.1050 from $1.1077.