On Wednesday, stock markets in Taiwan and South Korea experienced declines, influenced by the downturn in chip and technology shares, which followed a selloff on Wall Street. Meanwhile, Indonesian equities experienced an uptick, and the rupiah remained largely stable after the central bank unexpectedly reduced interest rates.
Shares in South Korea’s KOSPI fell 2.3% to hit their lowest level in more than a month, after mega cap tech companies on Wall Street dipped overnight following a record-breaking run for much of the year.
Taiwanese stocks TWSE: TAIEX slid 3% to their lowest level in two weeks, with semiconductor giant TSMC 2330 down 4.2%. The benchmark had hit a record high earlier this week.
Meanwhile, in Indonesia, the central bank unexpectedly cut its benchmark 7-day reverse repurchase rate by 25 basis points, its fifth reduction since September, bringing the rate to its lowest level since late 2022
Equities in Jakarta COMPOSITE which were up 0.7% before the decision, jumped 1%, while the rupiah USDIDR held onto its losses, last down 0.2%.
“With a subdued inflation profile, if rupiah retains its recent gains, we expect Bank Indonesia (BI) to retain a dovish hue in the fourth quarter,” said Radhika Rao, senior economist at DBS. “Policymakers will push for transmission of 100 basis points of easing undertaken to date.”
Other stock markets in the region were largely unchanged, with the ones in Singapore STI and Thailand SET up 0.1% and 0.2%, respectively.
Fed Chair Jerome Powell’s speech at the annual Jackson Hole symposium on Friday is the main focus, with traders watching for any pushback against market pricing of a rate cut next month.
“Investors will be curious to see if the recent U.S. data deluge has caused Powell’s opinions to shift,” said Vasu Menon, managing director for investment strategy at OCBC.
The Fed will release minutes of its July 29–30 policy meeting later on Wednesday, although they may offer limited clues as the meeting preceded the weak July jobs data.
The U.S. dollar index DXY rose for a third straight session, weighing on Asian currencies.
https://www.tradingview.com/symbols/FX_IDC-USDTWD/The South Korean won USDKRW and Taiwan’s dollar USDTWD fell 0.4% and 0.6%, respectively.
“The minutes may be able to inform us on where the consensus leans towards, amid growing contention between the two mandates of the Fed, employment and stable prices,” said Fiona Lim, a senior forex strategist at Maybank Singapore.
Notwithstanding some weakness in Asian currencies this morning, regional currencies are more likely to take a consolidative tone this week.”
HIGHLIGHTS:
** Trump says US may provide air support to back a Ukraine peace deal
** India, China agrees to resume direct flights, boost business links