Asian stock markets fall after transcripts from Federal Reserve meeting show doubts about QE3

BANGKOK – Expressions of doubt by Federal Reserve policymakers about the massive bond-buying program they launched to help stimulate the U.S. economy caused Asian stock markets to fall Thursday.

Transcripts from the Fed’s latest meeting, released Wednesday, showed some policymakers are worried that the bank’s $85 billion in bond purchases each month could eventually unsettle financial markets or cause the central bank to take losses.

The Nikkei 225 in Tokyo fell 0.8 per cent to 11,376.28. Hong Kong’s Hang Seng tumbled 1.5 per cent to 22,966.03. Australia’s S&P/ASX 200 fell 1.4 per cent to 5,025.60. South Korea’s Kospi dropped 0.4 per cent to 2,017.22. Benchmarks in Singapore, Taiwan, mainland China and New Zealand also fell. Indonesia’s rose.

“Market sentiment turned negative yesterday as Fed minutes showed growing uncertainties” about how long the U.S. central bank’s bond buying will last, said Gary Yau of Credit Agricole CIB in Hong Kong in a market commentary.

By buying bonds, the Fed drives up their prices and lowers interest rates, which have stayed at record lows. That keeps costs low for mortgages and other types of loans. This approach to monetary policy is known as quantitative easing.

The news about the Fed contributed to the biggest loss this year for the Standard & Poor’s 500 index. The S&P 500 sank 1.2 per cent to 1,511.95. The Dow Jones industrial average fell 108.13 to 13,927.54, a loss of 0.8 per cent. The Nasdaq composite fell 1.5 per cent to 3,164.41.

Benchmark oil for April delivery was down 56 cents to $94.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.88, or 2 per cent, to finish at $95.22 on the Nymex on Tuesday.

In currencies, the euro fell to $1.3272 from $1.3281 late Wednesday in New York. The dollar fell to 93.60 yen from 93.81 yen.

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