Nikkei Asia300 Index as Fed rate views, US political uncertainty weigh- Nikkei Asian Review

HONG KONG (Nikkei Markets) — Asian stocks fell on Thursday after the U.S. Federal Reserve raised interest rates and maintained outlook for another increase this year and as political turmoil in Washington kept investors cautious.

The Nikkei Asia300 Index shed 0.4% or 4.8 points to 1,238.93. Financial heavyweights in the region contributed heavily to the losses, with Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB) sliding more than 1.5% each.

The U.S. central bank on Wednesday concluded its two-day policy review with a 25-basis-point rate increase and a reiteration of its plans to raise rates once more in 2017. The Fed also outlined plans to scale back its balance sheet. The move came despite a recent spate of mixed economic data, including disappointing U.S. inflation and retail sales numbers released on Wednesday.

“It seems the Fed is no longer as data dependent as before and wants to carry on with the normalization process despite weakness seen in some economic releases,” Hussein Sayed, Chief Market Strategist at FXTM, wrote in a note. “It’s either that the recent wobble in economic data is temporary, and the next two months should prove it, or the Fed wants to have enough tools in case the economy fell into a new recession.”

Risk sentiment was also hurt after the Washington Post reported, citing officials, that special counsel Robert Mueller’s widening probe into Russia’s role in the 2016 U.S. presidential elections now includes an examination of whether President Donald Trump attempted to obstruct justice.

Regional energy producers fell after Brent crude prices lost 3.5% on Wednesday. In Hong Kong, China Petroleum & Chemical (Sinopec) fell 2%, while CNOOC and PetroChina shed at least 1%. Sapura Energy lost 5.2% in Kuala Lumpur.

The country gauge for China fell 1.3%. The International Monetary Fund raised China’s growth forecast for 2017 to 6.7% from 6.6% estimated in April.

Hong Kong’s index shed 0.7%. The Hong Kong Monetary Authority on Thursday lifted its base rate by 0.25 percentage points after the Fed’s move as interest rates in Hong Kong move in tandem with the U.S. because of the city’s currency peg to the dollar. New World Development and Sun Hung Kai Properties fell 1.7% or more to pace losses for the real estate sector.

The Nikkei Asia300 Malaysia Index slipped 0.1%.

Neighboring city-state Singapore’s gauge lost 0.2%. Real estate companies City Developments and CapitaLand fell 0.7% and 1.4%, respectively. Singapore developers sold 1,024 new private homes in May, a decline of 34% from April when sales totaled 1,555 units, according to Thursday’s data from the Urban Redevelopment Authority. Year-on-year, sales of new private homes were little changed.

Lenders United Overseas Bank, DBS Group Holdings and Oversea-Chinese Banking Corporation slipped at least 0.9% each after the U.S. central bank’s policy review.

South Korea and Taiwan’s country gauges rose at least 0.2%, helped by gains in technology heavyweights. Samsung Electronics added 0.7% in Seoul, while Taiwan Semiconductor Manufacturing Co rose 0.5% in Taipei.

India’s 44-stock index fell 0.1%. The nation’s top refiner Indian Oil Corp. fell 3.2% in Mumbai.

–Nimesh Vora and V. Phani Kumar