Asian equities followed global equities lower after fears of a faster tightening of monetary policy by central banks delivered the worst day on Wall Street in nearly five months.
Japan led the declines in Asian markets on Wednesday morning, with the Topix down 2.6%, while the Australian benchmark S & P / ASX 200 down 1.8%, and the Hang Seng index of Hong Kong and the CSI 300 down of China both reduced about 1% in morning trade.
The sale of stock markets comes after policymakers at the US Federal Reserve and Bank of England indicated it interest rate hikes Due to sustained high inflation, it may come faster than markets expected.
The prospect of a faster sharpening has led to an increase in yields, which is moving in reverse to bond prices. Yields on 10-year US Treasury bonds rose 0.2 percentage points in the past week, encouraging further sell-offs. The S&P 500 closed 2 percent lower on Tuesday worst one day fall since May, while the technically-focused Nasdaq Composite Index fell 2.8%.
The Fed said last week that it could Asset purchases of $ 120 billion per month and indicated that half of its board members expect an interest rate hike in 2022. This was followed by a warning from the Bank of England that UK inflation could rise to 4% next year in.
“It does not really feel like an optimal background in the fourth quarter,” said Robert Carnell, head of Asia-Pacific research at ING, pointing to rising Treasury yields, rising energy prices and concerns about contamination of the guilty Chinese developer Evergrande, which plagued world markets last week.
The yen continued its decline against the US dollar on Wednesday, with the Japanese currency briefly hitting its lowest level since March 2020 after falling about 2 percent since last week.
The yen reached Y111.68 to the US dollar amid political uncertainty surrounding the election of new Prime Minister of Japan today by members of the ruling Liberal Democratic Party.
Traders said it was difficult to see the currency break in any direction until the outcome was known, adding that the yen was doubling sentiment of sentiment over rising U.S. yields and commodity prices.
Higher returns in the US will attract fixed-income investment flows from Japan, says Shusuke Yamada, major equities in Japan and FX strategist at Bank of America. Japan’s trade deficit in August, meanwhile, was a sign of the country’s sensitivity to higher-priced imports.
Concerns about inflation are heightened by a rise in global commodity prices. Brent, the international benchmark, jumped above $ 80 a barrel Tuesday for the first time since October 2018, as a rise in natural gas prices has led countries to look elsewhere for their energy needs.
Oil prices fell in Asian trade on Wednesday, with Brent about 1 percent at $ 78.19 a barrel.