Asian markets fall as fears of prolonged rate hikes mount
Strong global services data prompts concerns of further central bank tightening
22 February 2023 - 08:18
by Agency Staff
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Hong Kong — Asian share markets followed Wall Street into the red on Wednesday as surprising strength in global surveys of services stoked fears that central banks would have to lift interest rates yet further and keep them up for longer.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.97%, after Wall Street posted its worst performance of the year on Tuesday, with an unexpectedly strong reading of S&P Global’s composite purchasing managers’ index (PMI) showing the US economy was not cooling yet.
“The flow of economic data surprises has continued overnight and this time it was a uniformly stronger-than-expected performance of the services sector across major developed market economies,” National Australia Bank (NAB) analysts wrote in a client note. “It concerns the market that central banks will have to hike rates a lot more to curb inflation,” said Kerry Craig, JPMorgan Asset Management’s global market strategist.
New Zealand’s central bank raised interest rates by 50 basis points (bps) to a more than 14-year high of 4.75% on Wednesday.
The central bank said it expected to keep tightening further to ensure inflation returned to its target range over the medium term.
The Bank of Japan (BOJ) said on Wednesday it would conduct emergency bond buying in a move to contain elevated yields, as the 10-year Japanese government bonds (JGBs) touched 0.505% for a second straight session, breaching the BOJ’s 0.5% cap and reaching the highest level since January 18.
Japan’s Nikkei share index fell 1.25% on Wednesday after a Tuesday PMI report showing the factory sector had contracted.
China’s benchmark shed 0.68% and Hong Kong’s Hang Seng index dropped down 0.27%.
Australia’s S&P/ASX 200 index lost 0.25% in early trading, falling for a second straight session and touching its lowest in more than a month on expectations of interest rate rises.
US 10-year notes touched 3.966%, the highest since November, before easing to yield 3.9389% on Wednesday.
The dollar index fell 0.077%, but analyst expect interest rate rises to lift the dollar, hurting emerging market equities, which benefited from a falling dollar.
US crude fell 0.5% to $75.98 a barrel and Brent was at $82.68, down 0.45%.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Asian markets fall as fears of prolonged rate hikes mount
Strong global services data prompts concerns of further central bank tightening
Hong Kong — Asian share markets followed Wall Street into the red on Wednesday as surprising strength in global surveys of services stoked fears that central banks would have to lift interest rates yet further and keep them up for longer.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.97%, after Wall Street posted its worst performance of the year on Tuesday, with an unexpectedly strong reading of S&P Global’s composite purchasing managers’ index (PMI) showing the US economy was not cooling yet.
“The flow of economic data surprises has continued overnight and this time it was a uniformly stronger-than-expected performance of the services sector across major developed market economies,” National Australia Bank (NAB) analysts wrote in a client note. “It concerns the market that central banks will have to hike rates a lot more to curb inflation,” said Kerry Craig, JPMorgan Asset Management’s global market strategist.
New Zealand’s central bank raised interest rates by 50 basis points (bps) to a more than 14-year high of 4.75% on Wednesday.
The central bank said it expected to keep tightening further to ensure inflation returned to its target range over the medium term.
The Bank of Japan (BOJ) said on Wednesday it would conduct emergency bond buying in a move to contain elevated yields, as the 10-year Japanese government bonds (JGBs) touched 0.505% for a second straight session, breaching the BOJ’s 0.5% cap and reaching the highest level since January 18.
Japan’s Nikkei share index fell 1.25% on Wednesday after a Tuesday PMI report showing the factory sector had contracted.
China’s benchmark shed 0.68% and Hong Kong’s Hang Seng index dropped down 0.27%.
Australia’s S&P/ASX 200 index lost 0.25% in early trading, falling for a second straight session and touching its lowest in more than a month on expectations of interest rate rises.
US 10-year notes touched 3.966%, the highest since November, before easing to yield 3.9389% on Wednesday.
The dollar index fell 0.077%, but analyst expect interest rate rises to lift the dollar, hurting emerging market equities, which benefited from a falling dollar.
US crude fell 0.5% to $75.98 a barrel and Brent was at $82.68, down 0.45%.
Spot gold added 0.1% to reach $1,836.18/oz.
Reuters
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