Asia Stocks Plunge Sharply in a Disappointment of No Stimulus Plans from the Fed

Stocks in Asia traded in negative territory in the morning session on Thursday, January 28, 2021, after the Fed announced the resolution of the committee to maintain policy rate, but did not announce stimulus plans to help the economy.

 

As of 9:26 local time in Thailand on Thursday, Nikkei dropped 1.01%, SSEC shedded 0.83%, HSI slipped 1.15%, ASX200 plunged 1.85% and Kospi fell 0.85%.

Yesterday, SET Index closed at 1,498.13 points, decreased 14.70 points or 0.97% with a trading value of 78.8 billion baht.

 

Last night, the Federal Reserve’s Monetary Policy Committee (FOMC) announced its resolution to maintain short-term interest rates at 0.00-0.25% and continue to buy bonds according to Quantitative easing (QE) totaling USD120.0bn per month which the Fed will buy the U.S. government bonds for USD80.0bn per month and buy mortgage-backed mortgage debt (MBS) for USD40.0bn per month.

Jorome Powell, President of the Federal Reserve provided perspective on economic trends, which he also expressed concern over the situation of the coronavirus outbreak which affected economic activity across the U.S. and around the world, resulting in a slowdown in economic recovery and employment.

However, in this meeting, the Fed has not announced any new measures to stimulate the economy causing the market to return to growing concerns, especially during the period of uncertainty about the USD1.9tn stimulus package of President Joe Biden, which has not been approved by Congress.

 

Finansia Syrus (FSS) expected SET Index to decline sharply today, following the plummet in the U.S. market and regional markets after a disappointment in the Fed’s minute for not providing further stimulus measures to support the economy. Thus, the analyst expected SET Index to move around 1,480 points.