Asian Markets react to FED Plan

The Asian stock market witnessed a temporary downfall as the investors reacted to yesterday’s comments made by the Federal Reserve where it was stated that the paring of the stimulus plan might be initiated sooner than expected. However, the Federal Reserve kept the stimulus bond buying at the same level of 85 billion dollars per month because the government shutdown for 16 days caused nearly 800,000 federal workers furlough, plus the unemployment rate and NFP data release was delayed.

Therefore, according to the FED chairman Mr. Ben Bernanke, the economy needs to be analyzed properly and after that the decision would be taken as to what should be done about the stimulus reduction and when.

Stock Indices – Asia

Shanghai Composite dropped by 0.4% as the top four banks of China unveiled their highest rise in soured loans in the past 3 years; while the Hang Seng index of Hong Kong fell by 0.7%. Moreover, slight losses were also seen in the Singapore, South Korea’s and Taiwan’s stock markets as investors and analysts are conceiving that ‘tapering is inevitable’ hence it could slow down the flow of money and ease of trade from Asian markets as well.

S&P 500 on a Roll

The S&P 500 index has been on a roll for the past 2 weeks as there were no indication of paring the stimulus plan, plus the government shutdown problem was also resolved that buttressed the market to move up sharply. However, a mixed reaction was seen yesterday where the market moved in a sideways direction during and after the speech but today in the Asian session, the S&P 500 futures are hovering at 1753 level after losing a few points in the Asian session. However, this move is merely a bearish correction and may go down till 1741 where its support zone is present.

Major Stocks

Mitsubishi Industries along with the Japan Airlines are set to unveil their reports today, where volatility would be seen in the stock prices as the analysts are expecting better results from both the companies against their previously posted records. The stimulus in the Japanese economy has certainly helped the exporters a lot hence bringing in more revenue to the country, so good sales and profits are expected from Mitsubishi Industries as well.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com

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