Most Asian markets down on back of US rate hike concerns
MOST Asian markets swung lower yesterday following healthy gains at the end of last week, as investors bet that the US Federal Reserve will raise interest rates before the end of the year.
Shares had soared at closing last week 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 years-long growth slowdown.
Analysts said comments from Fed boss Janet Yellen on October 14 suggested the US central bank would raise borrowing costs but at a steady pace.
Ms Yellen said running a “highpressure economy” could help it overcome the damage caused by the global financial crisis.
“If nothing else, this is another lower-for-longer prescription. However, these comments do not preclude a 25-basis-point rate hike 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 percent higher, with a pick-up in the dollar against the yen helping exporters, while Seoul was 0.2pc up.
But Shanghai closed 0.7pc lower and Sydney shed 0.8pc, while Singapore sank 0.2pc and Wellington tumbled 0.9pc. Hong Kong was down 0.8pc. Bangkok’s market dipped 0.2pc, having soared on October 14 as news of the death of Thailand’s king fuelled bargain-buying after heavy selling in his final days. The dollar bought 104.14 yen in Tokyo, from 104.16 yen in New York but still well up from the 103.66 yen last week.
The pound remains bolted at three-decade lows as traders fret over Britain’s plans to leave the European Union. –
‘If nothing else, this is another lower-forlonger prescription.’
Thomas Simons Jefferies LLC