Asia Lower as IMF Sees ‘Downside Risks’, Fed Minutes on Tap

Asia/Pacific stock indexes are on the defensive on Wednesday amid rising concerns over the health of the global economy. The weakness is being fed by a report that showed the International Monetary Fund cut its global economic growth forecast for a second time this year. General nervousness ahead of the release of the minutes of the March Federal Reserve monetary policy meeting on Wednesday is also weighing on investor sentiment.

At 04:52 GMT, Japan’s Nikkei 225 Index is at 21658.88, down 143.71 or -0.66 percent. Hong Kong’s Hang Seng Index is trading 30031.55, down 125.94, down 0.42 percent.

In South Korea, the KOSPI Index is at 2215.25, up 1.69 or +0.08 percent and China’s Shanghai Index is trading 3226.93, down 12.73 or -0.39 percent.

The Australian markets bucked the trend on Wall Street while outperforming Asia after Reserve Bank of Australia Deputy Governor Guy Debelle said in a speech the central bank was attempting to ascertain the appropriate policy path amid “conflicting signals” from the labor market, GDP data and business surveys.

“A critical question is which of these is providing the best signal of the global growth impulse? Is it GDP or the labor market? How can we reconcile the difference?” Debelle said. The S&P/ASX 200 Index is at 6223.60, up 1.80 or +0.03 percent.

IMF Cuts 2019 Growth

The International Monetary Fund again slashed its global economic growth forecast for 2019 on Tuesday, citing risks like increasing trade tensions and tighter monetary policy by the Federal Reserve.

“The balance of risks remain skewed to the downside,” the IMF said. “Failure to resolve differences and a resulting increase in tariff barriers above and beyond what is incorporated into the forecast would lead to higher costs of imported intermediate and capital goods and higher final goods prices for consumers.”

“Higher trade policy uncertainty and concerns of escalation and retaliation would reduce business investment, disrupt supply chains, and slow productivity growth,” according to the IMF. “The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth.”

Additionally, the fund said it expects the world economy to grow by 3.3% this year. That’s down from its previous outlook of 3.5%, which was also a downgrade. The IMF added that it expects the economy to expand by 3.6% in 2020, however.

Fed Minutes

The U.S. Federal Reserve will release the minutes of its March monetary policy meeting on Wednesday at 18:00 GMT. Investors will be eyeing the FOMC minutes to determine just how dovish central bank policymakers really are after last month’s policy shift.