Singapore Thursday was the worst day for Asian stocks since April 2020. Investors were less willing to take risks after inflation data from around the world sparked fears of aggressive interest rate hikes by the Federal Reserve.
MSCI’s broadest index of Asia-Pacific shares outside of Japan fell as much as 1.8% to 436.14 before gaining some ground. The index was down 0.79 percent at 440.82.
Futures for European stocks showed that they were going to go down. Eurostoxx 50 futures were 0.43 percent lower, German DAX futures were 0.45 percent lower, and FTSE futures were 0.25 percent lower.
Japan’s yen got close to the psychological barrier of 150 per dollar after hitting a new 32-year low of 149.93 earlier in the day. At the same time, the yield on a 10-year U.S. Treasury note hit a 14-year high, despite a bad report on the housing market.
Taylor Nugent, a market economist at National Australia Bank (OTC:NABZY) in Sydney, said, “Yields rose to new cycle highs and risk appetite fell.” Wall Street’s two-day winning streak ended on Wednesday, and the dollar rose from its lowest point in two weeks.
In Asia, Australia’s S&P/ASX 200 index fell 1.12% and Japan’s Nikkei fell 1%. However, after Bloomberg reported that China was thinking about shortening the time visitors have to stay in quarantine, the Nikkei shot up.
On Thursday, China’s stock markets went down while Hong Kong’s reached levels not seen since the global financial crisis of 2008-2009.
China’s benchmark lending rates stayed the same for the second month in a row on Thursday. This is because the government is waiting to release more monetary stimulus until other major economies have done the same.
In the currency markets, the U.S. dollar got stronger as investors flocked to it as a safe haven. This was because data from around the world showed that inflation was very high, which made it more likely that central banks would keep raising interest rates even if it hurt growth.
Even though inflation data showed that food prices have gone up the most since 1980, sterling fell 0.2% to $1.1055. So far, Britain’s Prime Minister, Liz Truss, has ignored calls for her to step down, but markets are thinking more and more that she might be replaced soon.
In a note, ING economists said, “It’s worth thinking about whether calling for a general election could be good for sterling.”
On Thursday, the offshore yuan hit a record low. It hit its lowest point at 7.2794 per dollar, which is the lowest level since 2011 when such data became available. The last time it traded, it was at 7.2615.
On Wednesday, Neel Kashkari, the head of the Federal Reserve Bank of Minneapolis, said that job market demand is still strong and that underlying inflation pressures probably haven’t reached their peak yet.
At its November meeting, the U.S. central bank is likely to raise rates by 75 basis points for the fourth time in a row.
Still, the Fed’s “Beige Book” survey of economic activity showed that there was some easing in a few areas, but businesses said that price pressures were still high.
Gold prices went down because the dollar and yields went up. On Thursday, they were still at a low point that hadn’t been seen in three weeks. [[/GOL]
As of the end of trading on Wednesday, the weak yen had dropped for 11 straight trading days, and for the past six trading days, it has hit new 32-year lows. [FRX]
Carol Kong, a strategist at the Commonwealth Bank of Australia (OTC:CMWAY), said, “I still think there is a very high chance of another intervention.” “It’s only a matter of time before they come into the market to support the yen.”
Last month, Japan bought yen on the foreign exchange market for the first time since 1998. This was done to help the yen, which had been falling in value.