Asia Shares Slip as Fears of More Fed Rate Hikes Grip

 

Asian stock markets were on the back foot again on Wednesday, feeling a pushback from the gloomy global outlook and the prospect of widespread tightening from central banks worldwide.

Japanese shares fell with investors worried over the economic slowdown while Hong Kong’s main benchmark dropped for a fifth straight session to its lowest level since mid-March.

China stocks were lifted by promises of government stimulus as Covid outbreaks continue.

Japan’s Nikkei share average dropped 0.71%, tracking overnight losses on Wall Street, where all three major indexes fell as a US services industry report underscored expectations the Federal Reserve will maintain its aggressive rate-hike stance.

 

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The Nikkei fell as far as 27,268.70 in early trading, its lowest level since July 19, before closing at 27,430.30. The broader Topix index lost 0.57%.

Tech stocks dragged the Nikkei lower, with chipmaker Tokyo Electron and SoftBank Group having the biggest negative impact.

Automakers were the best performers. Mitsubishi Motors gained 3.6%, Subaru Corp added 3.4%, while Mazda Motor Corp climbed 2.45%.

China stocks edged up, led by chipmakers on expectations of national support, but the gains were capped after data showed the country’s exports growth weakened in August.

Exports rose 7.1% in August from a year earlier, as surging inflation crippled overseas demand and fresh Covid-19 curbs and heatwaves disrupted production, reviving downside risks for the economy.

“The picture is not pretty, as China continues to battle the broadest wave of Covid-19 infections thus far,” said Nomura analysts in a note.

The Shanghai Composite Index rose 0.1%, or 2.85 points, to 3,246.29, while the Shenzhen Composite Index on China’s second exchange gained 0.5%, or 9.92 points, to 2,123.20.

Semiconductor companies jumped 2.7% as President Xi Jinping said China will strengthen its state-led system to achieve breakthroughs in core technologies, amid tensions with the United States.

 

US Data Fails to Lift Asia Mood

Hong Kong’s Hang Seng fell amid tightening overseas monetary policies and regulatory overhangs. The Hang Seng Index dropped 0.8%, or 158.43 points, to 19,044.30.

Elsewhere across the region stocks fell as investors took little cheer from strong US economic data and those weaker-than-expected Chinese trade numbers.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell to its lowest since mid-2020.

Equities in Philippines lost 1.1%, while benchmark indexes in Singapore and Indonesia fell 0.5% each. Indian stocks lost out with Mumbai’s signature Nifty 50 index down 0.27%, or 47.75 points, at 17,607.85.

Globally, European stock markets opened in the red on Wednesday after US economic data prompted traders to ramp up Federal Reserve rate hikes bets, pushing the dollar to a 24-year high against the Japanese yen.

US Treasury yields jumped and the dollar received a boosted by data on Tuesday which showed the US services industry picked up in August, reinforcing expectations for aggressive Fed rate hikes.

At 0808 GMT, the MSCI world equity index was down 0.3% on the day, while Europe’s STOXX 600 was down 0.4%. London’s FTSE 100 was down 0.7%.

The US dollar index was around 110.24, having hit a 20-year high of 110.69 earlier in the session.

The 10-year US Treasury yield hit its highest since mid-June at 3.365%, before easing slightly.

Cryptocurrency bitcoin touched its lowest since mid-June and the market cap of all cryptocurrencies fell below $1 trillion, according to data provider CoinGecko.

 

Key figures

Tokyo – Nikkei 225

Hong Kong – Hang Seng Index

Shanghai – Composite > UP 0.09% at 3,246.29 (close)

New York – Dow

 

  • Reuters with additional editing by Sean O’Meara

 

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China’s Trade Loses Momentum as Global Demand Drops

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Sean O’Meara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.