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Asian Stocks Fall Amid Fed's Rate Jump

With persistent concerns over the world’s economy, main markets in Asia fell on Thursday. 

After the US Federal Reserve on Wednesday approved its biggest interest rate hike since 1994, raising the federal fund's target rate by 75 basis points, Japan’s Nikkei share snapped a four-day losing streak. This was negligible as investors considered the impact of rising inflation and probable negative impacts of the Fed’s rate hike amid central banks' tightening.

The Nikkei finished the day at 26,431.20, up 0.4%. The figure shows a bounce back from its lowest since May 12. Topix with 0.64% reached 1,867.81.

MSCI AC Asia Pacific Index ex Japan saw a drop of 1.1% as opposed to earlier gains.

Stocks in China experienced a bad day: the blue-chip CSI300 index fell to 4,250.06, a drop of 0.7%, with the Shanghai Composite Index fell 0.6% to 3,285.38.

Following the pandemic lockdowns’ impact on the property business, new house prices in May fell for the second month in 2022. Real estate developers in China faced a drop of 1.3%. 

Hong Kong’s Hang Seng Index fell 2.17% to 20,845.43. Hong Kong’s tech index fell 3.3%: Alibaba, Tencent and Meituan fell between 3% to 4%.

Stocks in India experienced a bad trade day too: Mumbai’s signature Nifty 50 index fell 2.07% to 15,367.85.

In the meantime, the Bank of England expected to increase rates to cope with inflation, and will be focused on later today.

On Wednesday, the European Central Bank committed to modify the rout in the bond market. The pan-European STOXX 600 dropped over 1% and S&P 500 e-mini futures saw a decrease of 1.8%.

Giuseppe Sersale, strategist and portfolio manager at Anthilia in Milan said, “After the initial relief to the Fed … markets seem to have woken up that it is still a 75-basis-point rate hike.” He also said even if the Swiss central bank sees a jump by half a point, investors would obviously think that tightening policies are severe. The amount is too little to be happy about, he added.

The dollar gained power again in the Asian meeting, after receding from a 20-year high.

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By Saha on June 16, 2022

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