Shares across Asia-Pacific fell after a Federal Reserve warning that the US economic recovery could stall without new stimulus triggered a sell-off on Wall Street.
China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped 1 per cent in early trading on Thursday and Hong Kong’s Hang Seng index shed 0.9 per cent. South Korea’s technology-focused Kospi fell 1.5 per cent while Japan’s Topix and Australia’s S&P/ASX 200 slipped 0.6 per cent and 1 per cent, respectively.
Overnight, Wall Street’s S&P 500 reversed early gains to shed 2.4 per cent after US central bank officials highlighted the need for Congress to agree on a new round of economic support measures. The index is down five days out of the last six.
The benchmark is now down 9 per cent from its record high in August and on the cusp of a technical correction, defined as a 10 per cent drop from a recent peak.
The technology-heavy Nasdaq Composite fell 3 per cent, bringing its losses to 12 per cent since August.
Jay Powell, the Fed chair, and Chicago Fed president Charles Evans called on Congress to do more to support the recovery following the expiration of relief packages passed early in the coronavirus pandemic. Richard Clarida, Fed vice-chairman, told Bloomberg that “the economy is recovering robustly, but we are still in a deep hole”.
S&P 500 futures were 0.1 per cent higher in Asia on Thursday.
The dollar, as measured against a basket of its trading peers, was little changed after rising to its highest level since June on Wednesday as nervous investors turned to the greenback for safety.