Asia Markets

Australia falls 3% following Fed's economic forecast; NetEase jumps in Hong Kong debut

Key Points
  • Stocks in Asia Pacific dropped on Thursday.
  • Shares of Chinese internet giant NetEase surged in their Hong Kong debut on Thursday, jumping more than 5% from their issue price.
  • The U.S. Federal Reserve indicated on Wednesday that it would keep interest rates near zero through 2022.

Stocks in Asia Pacific fell on Thursday as the U.S. Federal Reserve indicated on Wednesday that it would keep interest rates near zero through 2022.

Shares in Australia were among the biggest losers regionally, with S&P/ASX 200 dropping 3.05% to close at 5,960.60.

The Nikkei 225 in Japan slipped 2.82% on the day to 22,472.91 while the Topix index shed 2.2% to close at 1,588.92. Over in South Korea, the Kospi slipped 0.86% to finish its trading day at 2,176.78.

In Southeast Asia, Singapore's Straits Times Index dropped 3.56% in afternoon trade.

Hong Kong's Hang Seng index closed 2.27% lower at 24,480.15. Shares of Chinese internet giant NetEase surged in their Hong Kong debut on Thursday, jumping more than 5% from their issue price.

Mainland Chinese stocks fell on the day, with the Shanghai composite down 0.78% to around 2,920.90 and Shenzhen component 0.814% lower at approximately 11,243.62.

Overall, the MSCI Asia ex-Japan index fell 1.7%.

Investor reaction to the Fed's recent economic forecast was watched on Thursday. The U.S. central bank kept interest rates unchanged on Wednesday and indicated it does not expect to raise them through 2022. The Fed also expects the U.S. economy to contract by 6.5% in 2020 before expanding by 5% in 2021. 

"We think the Fed is gonna keep their foot on the gas until the jobs come back, and there's a lot of jobs to come back," Gareth Nicholson, head of fixed income at Bank of Singapore, told CNBC's "Street Signs" on Thursday. Using the global financial crisis as an example, Nicholson said it took five years before the level of unemployment went back to pre-crisis levels.

"There is a dispersion between the economy and the markets," Nicholson said. "The Fed, I think, is looking more at the economy, they're looking at the unemployment rate which is at record levels. They're looking at a lot of the production and manufacturing which is still, you know, maybe it's turning slowly but it's still struggling."

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.213 after touching an earlier low of 95.95.

"The (Federal Open Market Committee's) decisions does not change our view for the USD," economists at Commonwealth Bank of Australia wrote in a note. "Once market participants digest the FOMC's views, we expect the USD to continue along its depreciating path, consistent with a recovery in the world economy."

Oil prices drop

Oil prices dropped in the afternoon of Asian trading hours, with international benchmark Brent crude futures 3.33% lower at $40.34 per barrel. U.S. crude futures also fell 3.69% to $38.14 per barrel.

The Japanese yen traded at 106.94 per dollar, having strengthened from levels above 109 seen earlier in the trading week. The Australian dollar changed hands at $0.6944 after seeing an earlier high of $0.7004.

— CNBC's Fred Imbert contributed to this report.

Correction: This story was updated to accurately reflect the Thursday moves of China's Shenzhen component.