Sep 21, 2023: Most Asian stocks sank on Thursday as the prospect of higher U.S. interest rates crimped the appeal of risk-driven assets, with focus now turning to more upcoming central bank rate decisions in the region.
Technology stocks were the worst hit, tracking overnight declines in their U.S. peers after the Federal Reserve held interest rates as expected, but warned that sticky inflation was likely to attract at least one more interest rate hike this year.
The central bank also said that interest rates will likely fall by a smaller-than-expected margin in 2024. The prospect of higher U.S. rates bodes poorly for Asian markets, given that it tightens monetary conditions and limits foreign capital flows into the region. This trend had battered Asian markets over the past year.
Tech-heavy bourses such as South Korea’s KOSPI, Hong Kong’s Hang Seng and the Nikkei 225 were the worst performers for the day, falling between 0.7% and 1.3%.
The Fed’s comments rattled broader financial markets. Australia’s ASX 200 sank 0.8%, tracking a decline in commodity prices.
Futures for India’s Nifty 50 index pointed to a negative open, after the index plummeted from record highs in the prior session. Sentiment towards India was also somewhat rattled by a growing diplomatic row with Canada over the alleged killing of a Sikh separatist leader.
Source Courtesy: Investing.com