Asian stocks set to slide on U.S. Fed fears, interest rate stance
By Suzanne Barlyn (Reuters) - Asian equities were set to slump on Thursday after the head of the Federal Reserve warned of a 'significantly worse' U.S. recession than any downturn since World War Two because of coronavirus pandemic fallout, sentiments that drove bonds higher on a safety bid
By Suzanne Barlyn
(Reuters) - Asian equities were set to slump on Thursday after the head of the Federal Reserve warned of a "significantly worse" U.S. recession than any downturn since World War Two because of coronavirus pandemic fallout, sentiments that drove bonds higher on a safety bid.
Fed Chair Jerome Powell on Wednesday issued his sober review of an economy slammed by a record pace of job losses and bracing for worse ahead as most U.S. states moved toward reopening following lockdowns aimed at curbing the spread of the virus.
Hong Kong's Hang Seng index futures <.HSI> <.HSIc1> slipped 0.92%, Australian S&P/ASX 200 futures
"We're picking up from what was a negative session in offshore markets - New York in particular," said Ray Attrill, head of foreign exchange strategy for National Australia Bank in Sydney.
A pushback against Powell's "downbeat assessments" about U.S. economic risks and his rejection of the idea of using negative interest rates as a tool for economic recovery "will spill into the Asia session," Attrill said.
Wall Street's three major indexes closed lower for the second day in a row, the Dow Jones Industrial Average <.DJI> fell 2.17%, the S&P 500 <.SPX> lost 1.75%, and the Nasdaq Composite <.IXIC> dropped or 1.55.
Still, Powell downplayed of the idea of using negative interest rates pushed the U.S. dollar higher against a basket of currencies.
The U.S. Dollar Currency Index <=USD>, which measures the greenback’s strength against six major currencies, was up 0.23% on the day at 100.26. The index fell as low as 99.57 earlier in the session.
Powell's comments followed a sharp selloff in equities on Tuesday after a warning from leading U.S. infectious disease expert Anthony Fauci that the virus was not yet under control. Fauci's comments prompted concerns about how the economy would emerge from weeks of virus-related lockdowns.
Authorities in Wuhan, the Chinese city where the novel coronavirus emerged, has launched an ambitious campaign to test all of its 11 million residents, after a cluster of new cases raised fears of a second wave of infections.
But a decision by an independent board overseeing billions in U.S. federal retirement dollars that it would indefinitely delay plans to invest in some Chinese companies also helped to fuel Wednesday's decline.
The administrators froze the plan days after the Trump administration told it to "halt all steps" tied to shifting its $40 billion international fund to track the MSCI All Country World ex-U.S.A. Investable Market Index <.MIWU00000PUS>
In commodity markets, oil prices fell about 2% despite the first decline in U.S. crude inventories since January, following Powell's remarks that a rebound may take awhile. [L4N2CV0LW]
The slide followed an earlier rally on optimism that slumping fuel demand would recover, while producers have slashed production to cut the mounting supply glut during the pandemic.
Global benchmark Brent crude
Yields on benchmark U.S. Treasury 10-year notes
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 1.09 points or 0.23 percent, to 471.99.
(Reporting by Suzanne Barlyn in New York; Editing by Cynthia Osterman)
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By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.