- The MSCI AxJ index fell 1.3%.Nikkei Stock Average fell 1.5%
- Nerve waves as inflation and interest rates look viscous
- USD Rise, Risk-Sensitive Currencies Fall
SINGAPORE (Reuters) – Asian stocks tumbled toward their worst week of the year on Friday, with oil falling as a string of hawkish central bank surprises made investors worry about the economic cost of keeping inflation under control. , the US dollar soared.
The MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 1.3% to a 4.2% decline for the week, its worst level in nine months. Hong Kong stocks (.HSI) returned from the break and fell 2% after the Chinese market was closed for a holiday.
Japan’s Nikkei Stock Average (.N225) fell 1.5% to drop 2.7% for the week, ending its 10-week winning streak. S&P 500 futures reversed overnight gains and fell 0.5%.
European futures fell 0.6%.
“What we’ve seen around the world in recent weeks is that the Fed will raise rates further and it will take longer to resolve this thorny inflation problem,” said Damian Rooney, a dealer at Argonaut, a Perth brokerage. It’s about being deaf,” he said.
He said the Bank of England’s higher-than-expected 50-basis-point rate hike was a “camel-breaking straw”.
Markets expect UK interest rates to reach 6% by the end of the year, but that outlook only briefly sent the pound soaring before falling with yields from the economic pain tightening.
The lack of stimulus in China’s economic recovery, the recent surprise rate hikes in Australia and Canada, and the prospect of two more rate hikes by the Fed have made growth concerns global.
Growth icons such as oil and the Australian dollar each fell about 1% on Friday. Brent crude was recently priced at $73.41 per barrel, while AUD crude is volatile at $0.6698. The pound fell 0.3% to $1.2709.
The US dollar index rose 0.3 percent to 102.65 on Friday, aiming for its first weekly gain in a month.
“The bottom line is that central banks around the world are becoming more hawkish today than they were a few months ago,” Nomura strategist Naka Matsuzawa said in Tokyo.
“The market is starting to price in more rate hikes and later rate cuts, and that is the driving force.”
Markets are in a volatile mood as UK retail sales and Purchasing Managers Index releases are released globally later in the trading day, and even positive surprises could hurt the interest rate outlook .
As Friday’s data showed, Japan’s core inflation rate hitting the fastest pace in more than 40 years only seems to highlight the scale and magnitude of the central bank’s problems. I didn’t.
Wong Kok Hung, head of equities sales trading at Maybank in Singapore, said the statistic gave the yen some reprieve, bucking a strong dollar that stabilized at $143.17 to the dollar, but others. It is said that the place became even more uneasy.
China’s offshore yuan hit a seven-month low of 7.2286 amid onshore markets shut down as markets began to question stimulus promises even after China cut its benchmark interest rate this week. fell back down.
“We believe market momentum will improve next Monday with the return of southward money and continued speculation of further stimulus in July,” said Steven Leung, executive director of institutional sales at UOB Cay Hian (Hong Kong). there are,” he said.
Bond markets were firm in Asia, with US Treasuries selling after Fed Chair Jerome Powell repeatedly said another rate hike was likely. Two-year yields held at 4.79% and 10-year yields held at 3.78%.
Interest rate futures pricing suggests a roughly 75% chance that the Fed will raise rates next month.
The prospect of higher interest rates weighed on gold, which has no income, as it fell to a three-month low of $1,910 an ounce.
Wheat futures took a breather after surging 20% in two weeks as traders braced themselves that Russia would scrap pacts guaranteeing the security of grain routes to the Black Sea.
Editing: Simon Cameron Moore and Sam Holmes
Our criteria: Thomson Reuters Trust Principles.