Rate hikes are draining liquidity, sparking losses in a range of assets. Global stocks face one of their worst weeks since pandemic-induced turmoil of 2020.
Asia shares sink on recession fears
Stocks fell in Asia on Friday amid fears of an economic downturn as monetary policy tightens to fight high inflation.
Japanese shares slid about 2%, but China and Hong Kong managed to buck the regional trend with a steady open. US equity futures stabilised and made modest gains after the S&P 500 closed at its lowest since December 2020.
Treasuries extended a period of marked volatility, lifting the 10-year yield to about 3.27%. The dollar bounced from its worst two-day drop since 2020.
Markets are rounding off a week buffeted by interest-rate increases, including the Federal Reserve’s biggest move since 1994, a shock Swiss National Bank hike that energized the franc and the latest boost in UK borrowing costs.
S&P 500 futures rose 0.5% and Nasdaq 100 futures increased 0.6%. Euro Stoxx 50 futures dipped 0.2%.
Japan’s Topix index was down 2.1%, Australia’s S&P/ASX 200 dropped 2.3%, South Korea’s Kospi retreated 0.9%, Hong Kong’s Hang Seng index added 0.5%, and China’s Shanghai Composite fell 0.1%.
Overnight, stocks tumbled on Wall Street as worries roared back to the fore that the world’s fragile economy may buckle under higher interest rates.
The S&P 500 fell 3.3% in a widespread rout, the Dow Jones Industrial Average lost 2.4% and was briefly down more than 900 points, while the Nasdaq composite sank 4.1%. It was the sixth loss for the S&P 500 in its last seven tries, and all but 3% of the stocks in the index dropped.
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