Asia-Pacific markets traded lower on Thursday, following a weak lead from Wall Street overnight where the Dow Jones Industrial Average closed at a fresh low for 2026 amid rising inflation concerns.
Investor sentiment was pressured after the Federal Reserve left its benchmark interest rate unchanged at 3.5% to 3.75%.
Chair Jerome Powell signalled a more cautious outlook on monetary easing, noting that inflation was not declining as much as “hoped.”
Adding to the cautious tone, U.S. producer price data for February came in above expectations, reinforcing concerns that price pressures remain persistent.
Attention in Asia is now focused on the upcoming decision from the Bank of Japan, which is widely expected to keep its policy rate steady at 0.75%.
By 11:40 am AEDT, regional indices were firmly in negative territory. Australia’s S&P/ASX 200 dropped 1.6%, Japan’s Nikkei 225 fell 2.7%, and South Korea’s KOSPI 200 declined 3%.
In Australia, labour market data pointed to a modest deterioration. Figures from the Australian Bureau of Statistics (ABS) showed the seasonally adjusted unemployment rate rose to 4.3% in February, above market expectations of 4.1%.
Sean Crick, head of labour statistics at the ABS, said: “The number of unemployed people grew by 35,000, contributing to the 0.2 percentage point increase of the unemployment rate in February.”
The regional weakness followed declines in US markets overnight, where the Dow fell 1.6%, while the S&P 500 dropped 1.4% and the Nasdaq Composite slid 1.5%.
Commodity markets reflected ongoing geopolitical tensions involving Iran, with Brent crude rising 3.8% to settle at $107.38 per barrel. Meanwhile, gold prices retreated, with spot gold falling 3.7% to $4,818.42 per ounce.
Elsewhere in Asia, Chinese markets showed relative resilience. The SSE Composite Index gained 0.3%, while the CSI 300 rose 0.5%.
Hong Kong's Hang Seng Index gained 0.6% to 26,025.4 while India's BSE Sensex added 0.8% to 76,704.1.
European markets were mixed in the prior session. The UK’s FTSE 100 fell 0.9%, Germany’s DAX rose 1%, and France’s CAC 40 edged 0.1% lower.
