Fears of a rate hike and a recession hurt Asian stocks a lot.
Friday was a bad day for Asian stock markets, and most indexes are on track to lose money for the week. This is because investors are worried about a global recession and think the Federal Reserve will take more “hawkish” steps.
The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both went down by more than 1% and were among the worst performers of the day. After data showed that Chinese house prices fell at the fastest rate in seven years, heavyweight real estate stocks weighed the most on the two
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The Hang Seng Index in Hong Kong fell 0.6% because of losses in real estate stocks.
Even though data showed that China’s industrial production and retail sales grew more than expected, Chinese stocks were expected to drop by more than 3% this week as worries about the country’s economic growth grew. Beijing’s strict zero-COVID policy has done a lot of damage to China’s economy this year.
Wall Street wasn’t a good sign for Asian stocks, and a continued drop in weekly jobless claims showed that the U.S. job market was strong. This gave the Fed more room to sharply raise interest rates.
The markets expect that the Fed will raise rates by 75 basis points next week, 75% of the time. After hotter-than-expected U.S. inflation data this week, traders also started pricing in the possibility of a 100-basis point increase.
Both the World Bank and the International Monetary Fund warned of a possible recession in the next few months, which made people feel even worse. This year and next, economic growth is likely to be slowed by high inflation and high interest rates.
The Indian Nifty 50 index fell 1.1%, while the Taiwan Weighted index fell 0.9%.With a 1.7% drop, Indonesian stocks fell behind their Southeast Asian peers.
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The KOSPI index in South Korea went down by 1% after it was reported that the country’s trade deficit in August hit a new record low. This year, the cost of South Korea’s imports went up because of high commodity prices and a weakening won. This hurt the economy.