Tapering talks affect Asian equities

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HONG KONG: Asian markets were mixed on Tuesday after a top official at the US Federal Reserve said that the bank might announce a small cut in its stimulus program next week.

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With a string of upbeat US data pointing to a pick-up in the economy and boosting confidence, the Japanese yen—considered a haven during uncertainty—came under pressure against the dollar and euro as investors seek out higher-yielding, “riskier” assets.

Tokyo eased 0.36 percent by the break, Hong Kong lost 0.17 percent and Seoul slipped 0.41 percent but Shanghai was flat while Sydney added 0.70 percent. James Bullard, the president of the Fed’s St. Louis branch, said on Monday that “a small taper” of the bank’s $85 billion a month bond-buying scheme could be on the cards at its December 17-18 policy meeting.

He said “the probability of a reduction in the pace of asset purchases has increased” with evidence of accelerating job gains and the likelihood those advances will continue. His comments came after the government last week said the unemployment rate had slipped to 7 percent in November from 7.3 percent in October, while a healthy 203,000 jobs were created—more than expected.

Days earlier, Washington said that the economy grew by 3.6 percent in the July to September quarter, well above the 3 percent predicted by analysts.

The positive numbers have spurred expectations of a “taper” to the stimulus, after the Fed had indicated on several occasions it would only do so when the economy showed that it was strong enough to stand on its own two feet.

In New York City, the Dow edged up 0.03 percent, the S&P 500 advanced 0.18 percent to a new record high and the Nasdaq added 0.15 percent.

AFP

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