Asia’s major markets began the week on a gloomy note on Monday after another painful sell-off on Wall Street, with investors’ focus on the Federal Reserve’s next policy meeting this week, where officials are expected to unveil their plans to battle soaring inflation.
Tech firms, which soared on the back of the pandemic, led the retreat in New York and Hong Kong after weak subscriber figures from Netflix fuelled concerns that the end of lockdowns and reopening of economies is seeing consumers changing their spending habits.
That comes as traders contemplate the end of the ultra-loose monetary policies put in place by central banks in early 2020 to cushion the impact of Covid-19 containment measures, with the Fed expected to start lifting interest rates from March.
Minutes from the Fed’s December gathering indicated officials were turning more hawkish as they grow increasingly concerned about inflation, which is sitting at a four-decade high.
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Commentators have tipped the first increase in borrowing costs to come in March followed by another three hikes before the end of the year, while the central bank is also forecast to start running down its vast bond-holdings that have helped keep rates down.
The prospect of tighter policy has battered markets in recent weeks, with the Nasdaq in New York down about 15% from its recent peak as tech firms are more susceptible to higher rates.
The S&P 500 is down more than 8% from a record high touched at the start of the month, and observers said it could see even more losses in coming weeks.
The selling filtered through to Asia, with Mumbai 2.2% down as it extended losses into a fifth day, while Hong Kong, Seoul, Jakarta and Wellington were each down more than 1%.
Oil Prices Rise
The Hang Seng Index dropped 1.24%, or 309.09 points, to 24,656.46. The Shanghai Composite Index was marginally higher, inching up 1.54 points to 3,524.11, while the Shenzhen Composite Index on China’s second exchange added 0.19%, or 4.60 points, to 2,392.24.
There were also losses in Sydney, Singapore, Manila and Bangkok, but Tokyo, Shanghai and Taipei squeezed out gains. London, Paris and Frankfurt all opened lower.
The benchmark Nikkei 225 index reversed earlier losses and advanced 0.24%, or 66.11 points, to 27,588.37, while the broader Topix index gained 0.14%, or 2.69 points, to 1,929.87.
Still, oil prices rose on optimism that demand will improve as countries reopen and the Omicron variant shows signs it may be peaking, allowing people to travel more freely and providing a boost to consumption.
Key figures around 0820 GMT
Tokyo > Nikkei 225: UP 0.2% at 27,588.37 (close)
Hong Kong – Hang Seng Index: DOWN 1.2% at 24,656.46 (close)
London > FTSE 100: DOWN 0.6% at 7,446.02
Shanghai > Composite: FLAT at 3,524.11 (close)
New York > Dow: DOWN 1.3% at 34,265.37 (close)
- AFP with additional editing by Sean O’Meara
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