MSCI’s broadest index of Asia-Pacific stocks outside of Japan fell 1.3% in early trading in Asia, following lower US stock futures. S&P 500 futures fell 0.6%, while Nasdaq futures fell 1.1%.
The Japanese Nikkei fell 1.6% and Hong Kong’s Hang Seng index fell 1.4% while Chinese stocks plunged 0.3%.
Tech stocks took a hit, dragged down by a 6.6% plunge in chipmaker Nvidia Corp after US officials demanded the company stop exporting two cutting-edge computer chips to China for the artificial intelligence.
On Thursday, regional purchasing managers’ indices for South Korea, Japan and China all pointed to slowing global economic activity, high inflation, rising interest rates and war in Ukraine having taken a heavy toll.
“August was a terrible month for balance fund investors, with no gain in diversification compared to holding a portfolio of stocks and bonds,” said Rodrigo Catril, senior FX strategist at National Australia. Bank, in an obligation to customers.
“The end of the month does not bring any surprises, but rather an extension of the main themes seen during August with further increases in core global bond yields and weaker equities.”
This month, the US Federal Reserve and the European Central Bank are both expected to raise borrowing costs aggressively.
Overnight, Cleveland Fed President Loretta Mester said the US central bank should raise interest rates to just above 4% early next year and hold them there to to bring inflation back to the Fed’s target, and that the risks of recession over the next two years had increased.
The ECB’s action on interest rates must be “orderly and predictable”, said Franois Villeroy de Galhau, head of ECB policy in France, on Wednesday, as data showed that inflation in the Eurozone hit a new record high last month, bolstering the case for a 75 basis point rate hike next week.
US stocks ended the month with the worst August performance in seven years. For the month, the Dow Jones Industrial Average fell 4.06%, the S&P 500 4.24% and the Nasdaq 4.64%.
In the currency market, the dollar rose 0.4% against the Japanese yen to a 24-year high of 139.5, while it gained 0.5% against the Australian dollar. [FRX/]
Hawkish expectations from the Fed saw Treasury yields hit new highs. The yield on the benchmark two-year bond jumped 6 basis points to its highest level since late 2007, 3.51%, while the yield on the 10-year bond rose 8 basis points to 3.21%. %.
US crude oil was down 0.65% at $88.97 a barrel, while Brent crude oil was down 0.7% at $95 a barrel. Russia on Wednesday halted gas deliveries via Europe’s main supply route.
Gold was down slightly. Spot gold traded at $1705.814 per ounce. [GOL/]