TOKYO – Asian stocks followed Wall Street lower and crude oil stayed weak on Thursday as investors weighed the risks of global recession amid hawkish Federal Reserve rhetoric and uncertainty about the Bank of England’s commitment to stabilising markets.
The dollar held its ground against major peers and bond yields edged higher as traders awaited US consumer price data that could shed light on the pace of further Fed policy tightening.
Japan’s Nikkei slipped 0.48 percent, while South Korea’s Kospi slid 1.15 percent.
Hong Kong’s Hang Seng dropped 1 percent, and mainland Chinese blue chips lost 0.28 percent.
MSCI’s broadest index of Asia-Pacific shares lost 0.57 percent, languishing close to Wednesday’s 2 1/2-year low.
UK FTSE futures pointed to a 0.18 percent decline at the open, and German DAX futures signaled a 0.35 percent retreat.
US emini stock futures offered some slight hope though, rising 0.1 percent following a 0.33 percent decline in the S&P 500 from overnight.
“I’m more concerned than I’ve been for some time,” said Tom Nash, a fixed income portfolio manager at UBS Asset Management in Sydney.
“The risk of an over-tightening episode and some mishap in financial markets is higher than I can remember.” sw
Minutes of the Fed’s latest policy meeting showed many officials “emphasized the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” although several committee members said it would be important to “calibrate” the pace of further rate hikes to reduce the risk of “significant adverse effects” on the economy.
Wednesday’s minutes were “not the dovish pivot some market participants are looking for,” Joseph Capurso, head of international economics at Commonwealth Bank of Australia, wrote in a client note.
“A pivot will depend on the inflation data.”
Fed Governor Michelle Bowman took a hawkish stance in a speech on Wednesday, saying that if high inflation does not start to wane she will continue to support aggressive rate rises. –Reuters
