Asian stocks stumble as US rate hike talk grows
> Investors expect Fed to raise borrowing costs before the end of the year
HONG KONG: Most Asian markets swung lower yesterday following healthy gains at the end of last week, as investors bet that the Federal Reserve (Fed) will raise interest rates before the end of the year.
Shares had soared on Friday after data showed the first rise in Chinese factory prices for more than four years, fuelling hopes the world’s number two economy is reaching the end of a yearslong growth slowdown.
Analysts said comments from Fed boss Janet Yellen on Friday suggested the US central bank would raise borrowing costs but at a steady pace.
Yellen said running a “high-pressure economy” could help it overcome the damage caused by the global financial crisis.
“If nothing else, this is another lowerfor-longer prescription. However, these comments do not preclude a 25-basispoint rate increase this year as another step in the normalisation process,” Thomas Simons, senior economist at Jefferies LLC in New York, wrote in a note to clients.
Most experts predict a rise by December at the latest and are closely watching the release this week of US industrial output and inflation data.
The prospect of higher borrowing costs weighed on Asian markets in the morning but some staged a recovery as the day wore on.
Tokyo ended 0.3% higher, with a pickup in the dollar against the yen helping exporters, while Seoul was 0.2% up.
But Shanghai closed 0.7% lower and Sydney shed 0.8%, while Singapore sank 0.2% and Wellington tumbled 0.9%.
Hong Kong was down 0.8%, with casino shares taking a hammering on news that 18 sales and marketing staff of Australia’s Crown Resorts – including an executive in charge of luring highrollers to Australia – had been held in China. – AFP