Asian shares fell to their lowest level in seven weeks on Friday, but the dollar stood tall as investors left riskier assets globally on fears that higher US interest rates and China’s strengthening of its zero-Covid policy This can make development difficult.
SCI’s broadest index of Asia-Pacific shares outside Japan fell 2.54 percent and fell to its lowest level since March 16, a day after Chinese Vice Premier Liu He pledged to support markets and the Chinese economy. .
The benchmark is down 3.6 per cent from last Friday’s close, which will be its worst week since mid-March. Japan’s Nikkei bucked the trend, rising 0.8 percent on its return from a three-day holiday.
Chinese blue chips lost 2.6 pc, Hong Kong benchmark 3.6 pc, and China’s yuan fell to an 18-month low in onshore and offshore markets.
Dickie Wong, director of research at Hong Kong brokerage Kingston Securities, blamed the overnight fall in the US market as well as fears about the health of the Chinese economy.
After a meeting of the country’s highest decision-making body, state television reported on Thursday that China will fight any comments and actions that distort, doubt or contradict the country’s COVID-19 response policy.
Investors said the zero-Covid policy appeared to be rejecting any easing, which is slowing Chinese economic growth and impacting global supply chains.
“Silver is expected that new Chinese fiscal measures may emerge over the weekend,” Mr. Wong said. “That’s the only thing that is giving Asian markets some support at their current low valuations.”
Overnight the Dow Jones Industrial Average and the S&P 500 both fell more than 3 pc, and the Nasdaq Composite fell 4.99 pc in its biggest single-day gain since June 2020.
However, things looked better in Europe, with regional stock futures falling 0.14 per cent and FTSE futures down 0.2 per cent. US futures remained flat.
The decline in US markets was largely the result of fears about the pace of the Federal Reserve’s tightening.
David Chao, global market strategist for APAC East Japan, said, “The risk for a policy mistake is the end of the current business cycle as a result of either (the Fed) not being strict enough to deal with inflation or being too hasty.” ” In Invesco.
The market is pricing in an 82pc chance of a 75 basis point rate hike from the Fed at the Fed meeting in June, according to the CME’s FedWatch tool, even though the Fed raised rates by 50 basis points this week and Chair Jerome Powell denied. 75 basis point increase.
US yields are rising on hopes of a sharp hike in rates.
The yield on 10-year US notes stood at 3.055 per cent, after crossing 3.1 per cent overnight for the first time since November 2018.
As investors turned to less-risk assets, the dollar index was at 103.62 on Friday, hitting a new 20-year high of 103.94 overnight on expectations that the US is better than other central banks. will increase interest rates rapidly.
The dollar index is up 0.43 percent this week, its fifth consecutive week of gain.