Asia stock markets struggle as Fed lift fades, caution returns over Iraq, US economy

HONG KONG – Asian stock markets struggled Friday as the euphoria faded from the Fed’s promises of prolonged low rates to boost growth.

Markets were subdued in lacklustre trading, with Japanese and Australian benchmarks headed lower after big gains the previous day.

The fluctuations reflect investors’ cautious mood heading into summer plus lingering concern over the possible widening of the turmoil in Iraq and uncertainty about the U.S. economy’s resilience.

Markets got a short-term boost from Federal Reserve Chair Janet Yellen’s pledge this week that short-term rates would not rise from record lows anytime soon.

“Both U.S. and Asian markets have been much more subdued after the FOMC meeting and it seems that once the dust settles the big moves in a number of assets were predominantly based on position re-adjustment than anything else,” said Chris Weston of IG Markets in Melbourne.

Japan’s benchmark Nikkei 225 dipped 0.1 per cent to 15,349.42 while Australia’s S&P/ASX 200 tumbled 0.8 per cent to 5,422.40. Both had jumped 1.6 per cent in Thursday’s session.

South Korea’s Kospi lost 1.2 per cent to 1,968.07 while Hong Kong’s Hang Seng edged 0.2 per cent higher to 23,214.80 and the Shanghai Composite Index in mainland China lost 0.4 per cent to 2,017.24.

On Wall Street, the S&P 500 index eked out another record, rising 0.1 per cent to 1,959.48. The Dow added 0.1 per cent to 16,921.46 and the Nasdaq composite slipped 0.1 per cent to 4,359.33.

In energy trading, benchmark U.S. crude oil for July delivery rose 3 cents to $106.08 in electronic trading on the New York Mercantile Exchange. The contract fell 39 cents on Wednesday.

In currencies, the dollar slipped to 101.89 Japanese yen from 101.93 in late trading Thursday. The euro strengthened to $1.3625 from $1.3612.