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Asian shares fall as Fed minutes bets on rate hike fuel by

© Reuters. — Most Asian stocks fell on Thursday, following a slide in U.S. markets as minutes from the Federal Reserve’s June meeting presented a hawkish outlook, while weak economic signals and fears of a Sino-U.S. trade war also weighed.

Wall Street indexes closed lower overnight as they showed almost all members supported more interest rate hikes in the coming months.

Technology-heavy indices were pressured by hawkish signals from the Fed, with Hong Kong̵[ads1]7;s index down 2.5%, while South Korea’s and the index fell 0.3% and 1.2% respectively.

Japanese shares were among the biggest decliners for the day, down 1.3%, while the fall 0.8%. Traders used the negative sentiment to further lock in profits in local stocks, after the Nikkei and TOPIX rose to 33-year highs in June.

Australia fell 1.2%, hit by concerns over slowing economic growth in major export destination China. Australian trade data released on Thursday furthered that idea, showing a decline in the country’s biggest metal export to China.

But Australia has still recovered from nine-month lows.

Singapore-traded futures for India’s index pointed to a weaker open, after the Nifty surged to record highs this week, outperforming its Asian peers.

Chinese stock losses limited amid trade war uncertainty, stimulus hopes

Losses in China’s and indices were relatively smaller than their Asian peers, with the two down around 0.3% and 0.2% respectively.

A series of weak economic readings from the country over the past week saw traders raise hopes for more stimulus measures from Beijing, as the government struggles to shore up a slowing economic recovery.

In addition to slowing economic growth, Chinese investors also grappled with the threat of a worsening trade conflict with Washington. China imposed a ban on exports of key chip-making materials to the United States this week, sparking concerns of retaliatory measures and more disruptions to global trade.

But Chinese exporters of chip-making materials, along with rare-earth miners, saw a rally this week.

Fears of interest rate increases are increasing, non-farm payrolls expected

The Fed minutes saw markets raise expectations for a rate hike in July, with a 90.5% chance the central bank will hike by 25 basis points at a meeting in late July.

Rising interest rates bode poorly for Asian stocks, given that they limit liquidity conditions and also weigh on foreign capital flows into the region.

The focus is now on data for June, due on Friday, for more clues on how the Fed may act in the coming months. The central bank aims to cool both inflation and the labor market with its interest rate increases.

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