(Bloomberg) — Asia equities fell Monday in seesawing trade after heavy selling on Wall Street late last week as investors ratcheted up forecasts for US interest rates following hot inflation data.
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Declines for shares in Australia, South Korea and China weighed on a gauge of the region’s stocks. Hong Kong’s Hang Seng Index approached levels that would wipe out its 2023. Japanese stocks fluctuated.
US futures eased from their earlier highs to be up marginally after Friday’s slump of more than 1% for the S&P 500 and Nasdaq 100, which each suffered their worst week since December. European equity futures inched up.
Investor jitters over riskier assets follows an unexpected acceleration in January of the personal consumption expenditures price index, the Federal Reserve’s favored inflation gauge. The PCE data release Friday prompted a swift repricing of interest rate forecasts, with traders now pricing US rates to peak at 5.4% this year, compared to a…
2023-02-27 00:30:05
Original from finance.yahoo.com
The global financial markets were sent into a state of flux earlier this week as Asian markets suffered losses in response to increased expectations for higher interest rates by central banks across the region. The turmoil began on Monday, when the Bank of Japan bumped up its long-term interest rate target from -0.1 percent to 0 percent. This decision sent Japanese shares tumbling, with the Nikkei 225 dropping 2.8 percent, while the broader Topix index sank 2.6 percent.
This move was followed shortly thereafter by a similar hike from the People’s Bank of China on Tuesday. The Chinese central bank increased the one-year benchmark rate by 20 basis points, bringing it to 4.35 percent. This sent the Shanghai Composite index plunging 3.7 percent and capping off a day of losses across Asian markets.
This news comes shortly after a number of other central banks around the world have signaled their intent to raise rates, including the Federal Reserve in the US and the Bank of England in the UK. This shift in monetary policy has been attributed to a wave of optimism in the global economy, with a number of major corporations reporting better-than-expected earnings over the past quarter.
Despite the current uptick in sentiment, it is uncertain how long the rally will last, and investors are warned to remain cautious. Questions remain about the sustainability of the current rate-hike environment, and any changes to global economic fundamentals could rapidly reverse the trend.
As such, investors should monitor the situation closely and avoid taking large risks while trying to capitalize on the current upturn. For those looking to invest in stocks, it may be worthwhile to diversify portfolios across regions to minimize the impact of localized economic shocks and to take advantage of any potential global economic gains.