Federal Reserve uncertainties drive down Asian markets

Transcripts from the Federal Reserve's January meeting were made public Wednesday. These documents showed growing doubts about the longevity of the U.S. central bank's bond buying program, which has kept interest rates at record lows. 

AP Photo/Bebeto Matthews
Edward Monti, left, a regulatory specialist, confers with trader Anthony Confusione, right, as he monitor trading activity for Virtu Financial at the New York Stock Exchange on Wednesday.

Expressions of doubt by Federal Reserve policy makers 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 policy makers 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 percent to 11,376.28. Hong Kong's Hang Seng tumbled 1.5 percent to 22,966.03. Australia's S&P/ASX 200 fell 1.4 percent to 5,025.60. South Korea's Kospi dropped 0.4 percent 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 percent to 1,511.95. The Dow Jones industrial average fell 108.13 to 13,927.54, a loss of 0.8 percent. The Nasdaq composite fell 1.5 percent 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 percent, 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.

Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

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