Asian markets suffer further losses as central banks turn screws

4 days ago 28

HONG KONG: Asian markets fell again on Friday (Sep 23) as part of a global sell-off fuelled by recession fears after central banks around the world ramped up interest rates to fight decades-high inflation.

With price rises showing no solid sign of letting up, monetary policymakers have been forced to go on the offensive, warning that short-term hits to economies are less painful than the long-term effects of not acting.

The Federal Reserve's decision on Wednesday to lift borrowing costs 75 basis points for a third successive meeting was followed by a warning that more were in the pipeline and they would not likely come down until 2024.

That came along with similar moves by banks in several other countries including Britain, Sweden, Norway, Switzerland, the Philippines and Indonesia - all pointing to a dark outlook for equities.

"We see this new even-higher-for-longer rate path as associated with a substantially higher likelihood of a hard landing, and so not just unambiguously hawkish but unambiguously bad for risk," Krishna Guha, vice chairman of Evercore ISI, said.

In a sign that recession expectations are rising, the yield on a 10-year United States Treasury jumped to 3.7 per cent, its highest level in a decade, while the S&P 500 sank to its weakest level since June and just above its 2022 lows.

There were also losses on the Nasdaq and Dow, while London, Paris and Frankfurt shed more than 1 per cent apiece.

Asia largely followed suit, though bargain-buying provided a modicum of support.

Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei and Manila all dropped.

The dollar, which has surged to multi-decade highs against its major peers as well as emerging currenc...

Read Entire Article