Asian equities trading lower as traders weigh inflationary risks from commodity-supply disruptions and brace for the week of Federal Reserve to start first rates hike this week.
The CSI300, HSI and KOSPI is trading down by 1.06%, 2.85%, 0.85% and 0.94% respectively. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by1.67%.
Chinese tech shares sharply plunged amid regulatory squeeze and in addition to fear of U.S could delist Chinese companies. Besides, surging COVID-19 cases in China is weighing heavily on its financial and economical outlook.
The dollar ticked up while the yen slipped, supporting the TOPIX.
The FED on Wednesday is expected to start its cycle of rate hike with a 25- basis-points increaser in order to shun down inflation.
“We are experiencing extraordinary volatility in global equities compounded by wavering market sentiment, and the risk of recession intensifies on spiraling commodity prices,” Louise Dudley, portfolio supervisor for international equities at Federated Hermes, wrote as repotted by Bloomberg.
“We expect ongoing swings in the short term as geopolitical uncertainty over Russian crude persists.”
The Fed “are really stuck between the real economy and the financial economy,” Karen Harris, Bain & Co. international head of macro analysis, stated on Bloomberg Television.
“You have mainstream struggling with inflation — that’s why we are set to see these rises coming in March. On the other side we are trying not to prick the financial economy. Either path is deflationary, recessionary.”
