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Asian Markets Slip Following Jerome’s Statement

Stocks across Asia-Pacific fell on Thursday as hopes for a quick recovery from the coronavirus pandemic faded after the head of the US central bank warned of long-term damage to the world’s biggest economy.

Hong Kong’s benchmark Hang Seng index fell 1.3 per cent, while Japan’s Topix index dropped 0.8 per cent and Australia’s S&P/ASX 200 index shed 0.9 per cent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks slipped 0.8 per cent.
South Korea’s Kospi index dropped 1.1 per cent after at least 120 people were confirmed as infected with Covid-19 in an outbreak linked to a nightlife district in Seoul. The development has underscored the difficulties in re-opening economies even after authorities appeared to have controlled the epidemic.

Global markets have rallied in recent weeks on hopes of a quick rebound for the global economy as countries ease lockdown measures intended to slow the pandemic. But additional waves of infections have damped sentiment this week as officials warned that more support measures will be needed to ensure a full recovery.

Losses in Asia followed a rough day on Wall Street overnight as US stocks tumbled in the wake of comments from Fed chairman Jay Powell, who cautioned that an economic recovery “may take some time to gather momentum”.

While Mr Powell ruled out negative interest rates — a measure recently endorsed by President Donald Trump — he said the US may need to deploy “additional policy measures” to avoid an extended period of low growth.

The S&P 500 finished Wednesday down 1.7 per cent as rising US-China tensions and uncertainty over the timeline for reopening the economy chiselled away at investor optimism.

Futures markets pointed to further losses when trading begins on Wall Street later in the day, with the S&P 500 tipped to drop 0.4 per cent. The FTSE 100 was expected to fall 0.9 per cent.

The fall in Australian stocks came as the country’s unemployment rate jumped to 6.2 per cent, the highest level in five years. The Australian dollar fell 0.3 per cent against the dollar to $0.6439, taking the currency’s losses to more than 8 per cent for the year.