Asian shares retreat after Fed minutes bring reality check

TOKYO (AP) — Asian shares slipped Thursday after sobriety set in on Wall Street, and the U.S. Federal Reserve minutes laid out challenges for the economy amid the coronavirus pandemic.

Japan's benchmark Nikkei 225 dropped 1.0% to finish at 22,880.62. South Korea's Kospi plunged 3.8% to 2,272.08. Australia's S&P/ASX 200 fell 0.8% to 6,120.00. Hong Kong's Hang Seng lost 1.9% to 24,714.19, while the Shanghai Composite fell 1.1% at 3,370.85.

“The latest Fed minutes had been one to offer a reality check for markets, though with the elevated prices, it had likely been an excuse to take some profit off the table as well,” said Jingyi Pan, a market strategist with IG.

“Most notably, Fed minutes from the July FOMC meeting had reflected officials’ views on the pandemic weighing heavily on the economy and posing risks to the medium-term outlook,” she said.

The central bank has been one of the main pillars propping up the market after it slashed short-term interest rates to their record low and essentially promised to buy as many bonds as it takes to keep markets running smoothly.

The Fed’s minutes of its latest policy meeting, released late Wednesday, showed policy makers are finding it difficult to forecast the path of the economy, which will depend greatly on what happens with the virus.

“In no uncertain terms, the FOMC minutes deflated the markets' Federal Reserve air balloon as the minutes unequivocally temper September. So without the Fed air balloon floating markets today, stocks are temporarily succumbing to forces of gravity,” said Stephen Innes, chief global market strategist at AxiCorp.

The S&P 500 fell 0.4% to 3,374.85, a day after it wiped out the last of its losses created by the pandemic and surpassed its Feb. 19 peak. The Dow Jones...