June 27, 2022

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Asian shares take a beating on hawkish Fed comments

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Asian shares were under pressure on

Thursday as indications by U.S. policymakers of aggressive rate

hikes and balance sheet reductions sparked a selloff in the

region, with equities in the Philippines leading losses.

Stocks in Manila fell 2.6% to mark their worst session

in more than three weeks. The Thailand index shed 1.6%

to track its biggest dip in a month, while South Korean

and Taiwanese shares also fell over 1% each.

Minutes of the U.S. Federal Reserve’s meeting in March

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released overnight showed deepening concerns among policymakers

that inflation had broadened through the economy, and hinted at

policymakers agreeing on balance sheet reductions.

Investors are gauging whether the Fed’s views could jolt the

flattened Treasury yield curve, which has been signaling a

potential recession on the horizon.

Yields on U.S. Treasury securities ticked higher following

the minutes, with returns on the 10-year note

climbing to 2.6%.

“Asia bond curves have steepened dramatically, compared with

the United States. This is unlikely to reverse until the U.S.

front-end rates stabilizes,” analysts at Bank of America said in

a note.

Yields on Singapore’s 10-year bond edged lower

to 2.484%, but were hovering at over three-year highs hit in the

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previous session. Indonesia’s benchmark bonds rose to

6.787%.

Meanwhile, worries about rising COVID-19 cases in China also

persisted. Shanghai, under a city-wide lockdown, reported over

19,000 new cases on April 6, although a vast majority was

asymptomatic. China’s stocks fell over 1%.

Investors have also been eyeing global central banks’ policy

moves…

Reuters

2022-04-07 04:01:37

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