Asian mar­kets tum­ble over US rate hike fears

The Myanmar Times - - International Business -

ASIAN stocks tum­bled yes­ter­day, ex­tend­ing last week’s global sell-off as com­ments from top cen­tral bankers rang alarm bells on trad­ing floors that the days of cheap money could be num­bered.

Re­gional in­vestors fol­lowed their US and Euro­pean coun­ter­parts in head­ing for the exit door af­ter two Fed­eral Re­serve of­fi­cials on Septem­ber 9 lent their sup­port to a hike in US in­ter­est rates as soon as this month.

Bos­ton Fed Pres­i­dent Eric Rosen­gren said higher rates were needed to pre­vent the econ­omy from over­heat­ing, while nor­mally dovish Gover­nor Daniel Tarullo also sig­nalled his open­ness to a 2016 in­crease in a tele­vi­sion in­ter­view.

Their re­marks came a day af­ter the head of the Euro­pean Cen­tral Bank played down the chances of fresh stim­u­lus, while Ja­panese of­fi­cials have also re­fused to give con­crete as­sur­ances about new mea­sures.

They also came as a sur­prise af­ter a string of below-par read­ings on the econ­omy – in­clud­ing ser­vice sec­tors ac­tiv­ity and jobs growth – had put off ex­pec­ta­tions of any tight­en­ing to December at the ear­li­est.

Tokyo stocks were down 1.7 per­cent and Shang­hai fin­ished 1.9pc lower, while Hong Kong ended 3.4pc down af­ter last week’s 13-month high.

Syd­ney and Welling­ton each gave up more than 2pc, while Seoul gave up 2.3pc with mar­ket heavy­weight Sam­sung Elec­tron­ics slump­ing 8pc on the back of the cri­sis over ex­plod­ing bat­ter­ies in its Note 7 de­vice.

“Cen­tral banks are re­luc­tant to add ad­di­tional stim­u­lus and that’s caus­ing a lot of con­cern,” Niv Da­gan, ex­ec­u­tive di­rec­tor at Peak As­set Man­age­ment LLC, told Bloomberg Ra­dio.

“We ex­pect ad­di­tional down­side in the near term.”

With the odds on a US rate hike in­creas­ing, the dol­lar rose against the yen, pound and euro last week but edged back yes­ter­day.

How­ever, it ral­lied against high­eryield­ing, riskier cur­ren­cies.

It soared more than 1pc against the South Korean won and 0.8pc ver­sus Malaysia’s ring­git, while also man­ag­ing to rack up large gains on the Aus­tralian dol­lar and In­done­sian ru­piah. –

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