Image: Reuters Berita 24 English - Asian equities fell in tumultuous trade on Wednesday, failing to extend Wall Street's surge as invest...
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| Image: Reuters |
Berita 24 English - Asian equities fell in tumultuous trade on Wednesday, failing to extend Wall Street's surge as investors continued to be concerned about interest rates and inflation, while the Japanese yen fell to a new 24-year low against the dollar.
MSCI's broadest index of Asia-Pacific stocks outside Japan dipped 1%, but was still up 1.39 percent from Monday's more than five-week low. The Nikkei 225 of Tokyo was unchanged after giving up early gains.
Investors are debating how concerned they should be about central banks driving the global economy into recession as they try to cool soaring inflation with interest rate hikes.
The major U.S. stock indexes rallied 2% overnight on speculation that the economic picture is not as bad as it appeared last week, when the S&P 500 posted its largest weekly percentage fall since March 2020.
"I believe this recent post-holiday bear market recovery reflects investors' anxiety about whether we've seen the pinnacle of inflation and Fed hawkishness or not — I believe we're getting close," said David Chao, global market strategist for Asia Pacific at Invesco.
"Even though I believe global equity markets will conclude the year higher than they are now, it's reasonable to expect prolonged market volatility until it is obvious that the Fed will not force the US economy into contraction in order to reduce persistent levels of inflation," says the author.
The S&P 500 and Nasdaq futures both dipped over 0.5 percent, indicating that Wall Street may not be able to duplicate Tuesday's rise.
The Shanghai Composite Index plummeted 0.4 percent, Hong Kong's Hang Seng Index fell 0.9 percent, and Korea's KOSPI fell 1.78 percent.
Investors are waiting for more signals from US Federal Reserve chair Jerome Powell's testimony to Congress, which begins today, to see if another 75 basis point rate hike is on the cards at the Fed's July meeting.
Apart from the Bank of Japan, which committed last week to maintain its ultra-low interest rate policy, most other global central banks are in a similar scenario.
The yen has been weighed down by the disparity between Japan's low interest rates and rising US rates, which saw it hit a new 24-year low of 136.71 per dollar in early trading before firming to 136.18.
The Bank of Japan's April policy meeting minutes, released on Wednesday, revealed the central bank's concerns about the impact of the country's falling currency on the country's economic environment.
Other currency movements were more subdued on Wednesday, with the dollar index, which measures the value of the US dollar against six other currencies, slightly firmer at 104.6.
The yield on the benchmark 10-year US Treasury note remained stable at 3.2674.
According to a source briefed on the plan, US President Joe Biden is anticipated to ask for a temporary suspension of the 18.4-cent-per-gallon federal gasoline tax on Wednesday. [O/R]
Brent crude declined 2.1 percent to $112.27 a barrel, while US crude dropped 2.21 percent to $108.09.
Gold is currently trading at $1828.70 per ounce, down 0.21 percent.
After plunging as low as $17,592 last week, Bitcoin is now trading around $20,640.
