HONG KONG, Feb 22 (Portal) – Asian equities slipped to a 47-day low on Wednesday as a heightened interest rate outlook and geopolitical tensions weighed on risky assets.
MSCI’s broadest index of Asia Pacific equities outside Japan (.MIAPJ0000PUS) fell 1.02%, hitting its lowest level since Jan. 6.
Japan’s Nikkei (.N225) slipped 1.32%, its worst performance in about a month after Tuesday’s Purchasing Managers’ Index report showed the factory sector had shrunk.
The Bank of Japan (BOJ) on Wednesday said it would conduct emergency asset purchases to curb elevated yields as 10-year Japanese government bonds touched 0.505% for the second straight day, breaching the BOJ’s 0.5% ceiling and cap of 0.5% reached the highest level since January 18th. read more
The Reserve Bank of New Zealand raised interest rates by 50 basis points to a more than 14-year high of 4.75%. The central bank said it expects further tightening to ensure inflation returns to its target range over the medium term. Continue reading
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Wall Street posted its worst performance of the year on Tuesday, with a stronger-than-expected read from S&P Global’s composite PMI showing the US economy is not yet cooling.
“What worries the market is that central banks need to raise rates much more to curb inflation,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
“I think the bigger concern right now is the earnings outlook and how much it’s really going to fall from here… versus the uncertainty about the likelihood of a US recession.”
Russian President Vladimir Putin has warned the West about Ukraine by suspending his latest major nuclear arms control treaty with the United States. US Secretary of State said Putin’s move was “deeply unfortunate and irresponsible”.
“This (the suspension of the nuclear pact) spurred the next level of escalation concerns, prompting a response from President Biden in Poland saying Russia will never win the war and pledging more support for Ukraine,” das said Saxo Markets APAC strategy team in a note to clients. “The focus now is on China, which must back its peace deal words with action after being accused of supplying arms to Russia.”
China’s benchmark (.CSI300) lost 0.68% and Hong Kong’s Hang Seng Index (.HSI) lost 0.09%.
Australia’s S&P/ASX 200 index (.AXJO) shed 0.3% on Wednesday, falling for the second straight session and hitting its lowest level in more than a month on expectations of rate hikes.
E-mini futures for the S&P 500 rose 0.16%.
10-year US bonds hit 3.966%, the highest since November, before falling to 3.948% on Wednesday.
The dollar index was flat, but analysts expect rate hikes to lift the dollar, hurting emerging market stocks that benefited from a falling dollar.
US crude fell 0.46% to $76.01 a barrel and Brent was at $82.74, down 0.37%.
Spot gold gained 0.1% to hit $1,835.28 an ounce.
Reporting by Selena Li; Edited by Bradley Perrett
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