Asian Shares Down Tracking Losses on Wall Street, as Traders Look ahead Fed Policy Decision

Wednesday saw broad declines throughout Asian stock markets, tracking losses on Wall Street overnight, as investors anticipated the results of the Federal Reserve’s policy announcement later in the day.

As of 9:31 AM in Bangkok, the Hang Seng index in Hong Kong fell 1.59%, with energy, industrial, and healthcare stocks leading the loss. Meanwhile, the Hang Seng Technology index dropped 2.84%.

In Australia, the S&P/ASX 200 fell 1.07%, while South Korea’s Kospi dropped 0.64%. Markets in Japan and mainland China are closed for a holiday Wednesday.

All three major U.S. indices dropped for a second consecutive session as banking worries returned to Wall Street ahead of the Federal Reserve rate decision.

The Dow Jones Industrial Average and the Nasdaq Composite both declined by 1.08%, whereas the S&P 500 saw a slightly larger decline of 1.11%.

With the recent collapse of First Republic Bank, investors are expecting banks to tighten lending policies in response to the recent string of bank failures that began with Silicon Valley Bank and Signature Bank in March.

Reuters’ poll of economists found that the majority anticipate a rate raise of 25 basis points from the Fed, with the minority predicting that it will remain unchanged.

If this occurs, the focus will shift to whether or how strongly Fed Chair Jerome Powell resists investors’ expectations for a rate cut by the end of the year.

According to Vishnu Varathan, head of economics at Mizuho Bank in Singapore, “the hike will be a contemplative one that acknowledges heightened two-way risks and narrower path to a soft-landing.”