Asian stocks were mixed on Wednesday morning as traders remained concerned about the state of the global economy and eager to receive the FOMC minutes from the July Federal Reserve meeting which will be released later on Wednesday and are expected to provide a glimpse into why the Fed cut interest rates last month for the first time in ten years. Also of interest to traders is the upcoming Jackson Hole Economic Symposium which will address “challenges to monetary policy,” a topic that is certainly timely in this period of economic volatility.
Most of Asia’s benchmark indexes were in the red, with Australia’s ASX 200 leading the losses with a decline of 1.09 percent as of 11:23 a.m. HK/SIN. Japan’s Nikkei 225 was down 0.39 percent and China’s Shenzhen Composite was 0.10 percent lower. Hong Kong’s Hang Seng Index was flat while South Korea’s Kospi managed to squeeze out a gain of 0.22 percent.
Though global benchmarks have gotten a boost lately on reports that central banks worldwide are considering cutting interest rates to boost both their economies and the global economy, analysts worry that these rate cuts alone may not be sufficient to support growth. In fact, analysts argue that interest rate cuts alone won’t do the trick – increased government spending is also required to promote economic activity.
In the past month, India, Thailand, New Zealand and the Philippines all cut their interest rates, following the U.S. interest rate cut in July. Reports of expected rate cuts in China and Germany have also surfaced in recent days.
As for the U.S., the Federal Reserve has yet to confirm that it’s begun a policy of quantitative easing, or even to confirm that further interest rate hikes are coming. Instead, it claimed that the recent rate cut was merely a ‘mid-cycle adjustment’. President Trump has since demanded that the Fed lower interest rates further, and investors are hoping for a rate cut of at least 50 basis points by September.
Currency Market Movements
On the currency markets, the U.S. dollar was relatively flat on Wednesday morning, with the dollar index up a meager 0.01 percent to 98.20. The greenback rose against the yen, gaining 0.24 percent to 106.74. The euro and the pound also eased against the dollar, down a modest 0.02 percent and 0.04 percent respectively.