Asian Stock Market: Trades in negative territory amid Fed’s hawkish stance

Asian stocks trade lower on Thursday amid the higher-for-longer interest rate narrative in the US following the Federal Reserve (Fed) meeting.

At press time, China’s Shanghai is down 0.59% to 3,090, the Shenzhen Component Index declines 0.71% to 10,001. South Korea’s KOSPI, Hong Kong’s Hang Seng, and the Nikkei 225 are the worst performers for the day. Hang Sang falls 1.31% to 17,651, Kospi drops 1.61% and Japan’s Nikkei falls 1.25%.

In China, the People's Bank of China (PBoC) maintained benchmark lending rates steady on Wednesday, as expected by the market. The one-year Loan Prime Rate (LPR), was kept at 3.45%, while the five-year LPR was unchanged at 4.20%. However, investors remain concerned about the economic slowdown in the second’s world largest economies.

In Japan, the Bank of Japan (BoJ) interest rate decision will be the highlight on Friday. BoJ is widely expected to keep its short-term interest rate target of -0.1% and its 10-year bond yield target of around 0%. The Japanese central bank has previously declared that monetary policy shifts would not be considered until local wage and inflation data meet its projections.

Former top currency diplomat Takehiko Nakao said on Wednesday that Japanese authorities could intervene in FX again to support the yen if it declines further.

On Thursday, central bank officials in the Philippines and Indonesia will announce monetary policy decisions. The Bangko Sentral ng Pilipinas is expected to raise rates by a quarter point, while the Indonesian central bank is expected to maintain rates unchanged.

The closely watched event this week will be the BoJ meeting on Friday. On the US docket, the US weekly Jobless Claims, the Philly Fed, and Existing Home Sales will be due later on Thursday and the preliminary US S&P Global PMI for September will be released on Friday.