Equities plunge on rising inflation, Ukraine risks; China markets divestments
Equities plunge on rising inflation, Ukraine risks;  China markets divestments

Equities plunge on rising inflation, Ukraine risks; China markets divestments

A visitor wearing a protective face mask walks past a listing board outside a brokerage house in Tokyo, Japan on March 2, 2020 after an outbreak of coronavirus. REUTERS / Issei Kato / Files

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  • > Asian Stock Markets:
  • Asia follows US, European stocks fall
  • Hong Kong fell 3.5%, Nikkei fell 2.4%
  • South Korean, Australian benchmark stock indices also fell

TOKYO, March 11 (Reuters) – Asian equities prolonged a global fall on Friday after the fastest US inflation in four decades, and a hawkish European Central Bank (ECB) boosted expectations of more aggressive rate hikes, hammering the mood that had already stung Ukraine war.

Sellers swarmed the Chinese stock markets after U.S. listed Chinese stocks fell following the naming of the first Chinese firms that would potentially be delisted in the United States.

Risk appetite suffered more broadly as investors prepared for a faster tightening of monetary conditions, after data on Thursday showed a 7.9% annual jump in US consumer inflation in February, the largest increase in 40 years.

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In morning trading in Asia, MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) slipped 1.7% as a Wall Street retreat infected many of the region’s country standards, which turned deep red.

Hong Kong’s Hang Seng Index (.HIS) fell 3.5%, with shares of Yum China (9987.HK)and four other companies were beaten after the companies were involved in an audit dispute between Beijing and Washington. Read more

The sale of Chinese shares came even though the country’s securities regulator on Friday said it was confident it would reach an agreement with US counterparties on securities supervision. Read more

Outside Hong Kong, losses in Chinese equities were smaller, with the country’s blue-chip index (.CSI300) a decrease of 1.3 per cent.

Another place, Japan’s Nikkei (.N225) lost 2.4% while South Korean shares (.KS11) throw 1.0% and Australian shares (.AXJO) fell 0.9 per cent.

The mood was not helped either, after negotiations between Ukraine and Russia’s foreign ministers on Thursday brought some respite in the conflict between the two countries.

“Disappointingly enough, although it was widely expected, negotiations between Russia and Ukraine failed to yield a positive outcome,” said Rodrigo Catril, a senior currency strategist at NAB in Sydney.

Analysts believe that Russia’s war against Ukraine will push inflation further up around the world as it drives up oil and other commodity prices.

Goldman Sachs downgraded its real gross domestic product growth in the United States for 2022 to +1.75% from + 2.0% earlier to reflect higher oil prices and other stunted growth in the context of the war in Ukraine.

While markets broadly expect the US Federal Reserve to raise the Fed funds target by 25 basis points by the end of next week’s monetary policy meeting, CPI data suggested the FOMC could move “more aggressively” to curb inflation, which promised by Fed Chairman Jerome Powell last week. Read more

The ECB said on Thursday it would halt bond buying in the third quarter, opening the door for rate hikes as rising inflation offsets concerns that economic growth has hit Russia’s invasion of Ukraine. Read more

“The ECB meeting was clearly more hawkish than expected,” said Chris Weston, head of research at the Pepperstone brokerage in Melbourne.

“We see 11 basis points for increases priced into EU interest rates at the ECB meeting in July.”

In the foreign exchange market, the euro was 0.13% higher at $ 1.0997, as the high-pitched tone of the ECB failed to increase the momentum of the single currency significantly.

“The ECB provided more clarity on its stimulus exit plans, but it is unlikely to give the euro a sustained boost, not while the conflict between Russia and Ukraine is ongoing,” analysts at Westpac said in a morning note.

The yen traded at 116.25 per dollar after brief relief to a five-year low of 116.39 per dollar.

The dollar index (.DXY) held stable at 98,491, below a more than 1-1 / 2 year high of 99,418 hits Monday.

In the bond market, the yield on 10-year US government bonds was 1.9671%, while Japan’s 10-year government bond yield was 0.185%.

In commodity markets, US crude oil fell 0.4% to $ 105.6 per share. barrel. Brent oil was 1.0% lower at $ 108.15 per barrel. barrel.

Gold was flat. Spot gold was trading at $ 1,995.65 per ounce.

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Reporting by Daniel Leussink in Tokyo Editing Shri Navaratnam

Our standards: Thomson Reuters trust principles.

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