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Asian Stocks Down as Worries of an Economic Downturn Remain
© Reuters
By Zhang Mengying
Investing.com – Asia-Pacific stocks were mostly down on Monday morning as investors are concerned about a recession caused by tightening monetary policies from major central banks.
Japan’s Nikkei 225 fell 1.72% by 10:24 PM ET (2:24 AM GMT).
South Korea’s KOSPI fell 2.36%.
In Australia, the ASX 200 was down 1.03%.
Hong Kong’s Hang Seng was down 0.74%.
China’s Shanghai Composite was down 0.38% while the Shenzhen Component gained 0.42%
Major central banks hiked interest rates last week, adding to investors’ worries about a recession. The U.S. Federal Reserve announced Wednesday an interest rate hike of 75 basis points, the biggest since 1994. The Swiss National Bank also unexpectedly hiked interest rates by 50 basis points on Thursday while the Bank of England raised its interest rates to 1.25% on the same day.
“Market volatility has remained elevated with the VIX index seeing the highest weekly close since late April, a theme that goes beyond equities with a spike in FX and rates volatility alongside wider credit spreads,” NAB strategist Rodrigo Catril told Reuters.
“At this stage, it is hard to see a turn in fortunes until we see evidence of a material ease in inflationary pressures.”
Fed Chair Jerome Powell will testify to the House on Wednesday and Thursday. The Fed vowed last week that its commitment to tame inflation was “unconditional” while Fed Governor Christopher Waller said on Saturday that he would support another hike of 75 basis points in July.
Aiding sentiment, U.S. President Joe Biden said on Saturday that he was considering removing some tariffs on China and a possible pause on the federal gas tax to fight inflation.
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