Asian markets tumble over US rate hike fears
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. –