Fed hike concerns weigh on Asia

Asia equity markets tumble on China/US fears

Equity markets finished weaker in the US on Thursday as investors took risk off the table ahead of the long weekend, and Fed rate hike fears pushed US yields sharply higher, spiking equity prices. The S&P 500 fell 1.21%, the rate-sensitive Nasdaq tumbled by 2.14%, while the Dow Jones retreated by 0.32%, backstopped by firm oil prices. The same fears are permeating US markets today as futures trading commenced in Asia. S&P 500 and Dow futures are 0.50% lower, while Nasdaq futures have fallen by 0.90%.

In Asia, the ever-increasing sweep of covid lockdowns in China, and mixed data from the mainland have combined with weak US price action to push Asian markets lower. Japan’s Nikkei 225 has tumbled by 1.50%, while South Korea’s Kospi has edged just 0.20% lower, helped by a weakening currency.

Mainland China is deep in the red, with the Shanghai Composite down 0.80%, with the narrower Shanghai 50 retreating by 1.65%. The CSI 300 has fallen by 0.95%. Hong Kong markets are closed. Although markets are in the red in China, it would not surprise me at all if we saw a mysterious rally towards the close as China’s “national team” steps into “smooth” flows.

Around Asia, Singapore is down by 0.65%, Kuala Lumpur is 0.30% lower, while Jakarta bucks the trend, climbing 0.50%. Taipei has fallen by 0.65%, with Bangkok unchanged and Manila rising by 0.25%.

European, Australian and New Zealand markets are closed today. A stronger US dollar, lower US bond futures and weakening China data won’t give the perpetual FOMO-bulls of Wall Street any reason to sing. We also face substantial downside risks from the underway US earnings season now. Not so much with Q1 results, but rather the 2022 outlooks by the index heavyweights. Netflix will be the first test of the market’s resolve if its numbers and outlook darken.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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