TOKYO — Asian stocks fell on Friday, following losses on Wall Street after Federal Reserve Chairman Jerome Powell signaled that interest rate hikes need to be faster to fight inflation.
Major indices cascaded across Asia, with Tokyo down nearly 2% sharply. Japan’s consumer price index data showed an increase for the seventh consecutive month, although the results were within market expectations.
Japan Benchmark Nikkei 225 JP:NIK
fell 1.9%. S&P/ASX 200 AU:Australian XJO
fell 1.5% while South Korea’s Kospi KR:180721
shed 1%. Hong Kong Hang Seng Hong Kong: HSI
fell 0.9%, while the Shanghai Composite CN:SHCOMP
it was flat. Benchmarks in Singapore SG:STI,
and Indonesian ID: JAKIDX
Japanese Finance Minister Shunichi Suzuki made comments seen as a slightly more forceful pushback against “sudden movements” in exchange rates after meeting with Treasury Secretary Janet Yellen on the sidelines of ministerial meetings. finance of the G20.
US dollar USDJPY
rose to 128.57 Japanese yen early Friday from 128.36 yen.
Intervention may be coming, particularly from the US, said Stephen Innes of SPI Asset Management.
“The BOJ is likely to remain steadfast in its approach of an ultra dovish monetary policy relative to peers that implicitly welcomes yen depreciation,” he said, referring to Japan’s central bank.
But the main cause of the dollar’s rise against the yen and other currencies, a widening gap between interest rates in Japan and some other Asian countries and rising interest rates in the United States, is unlikely to abate.
In a panel discussion hosted by the International Monetary Fund, Fed Chairman Jerome Powell said the Fed needs to move faster than before to tackle high inflation, suggesting they are likely to raise interest rates in the next few months.
Powell’s comments helped push stocks lower on Wall Street. The S&P 500SPX
it closed 1.5% lower at 4,393.66 after rising 1.2% earlier. Dow Jones Industrial Average DJIA
fell 1% to 34,792.76 and the Nasdaq COMP
it fell 2.1% to 13,174.65.
“Under the weight of war, global energy and food risk, equity markets may well start to sag, unfortunately quite spectacularly. We have been saying for some time that the only way to protect your investment portfolio is to be cautious with stocks and buy gold, oil and US dollars,” said Clifford Bennett, chief economist at ACY Securities.
The broader market has had a choppy week as investors review the latest round of corporate earnings amid lingering concerns about rising inflation and the Fed’s shift from ultra-low interest rate policy.
The Fed has already announced a quarter percentage point rate hike and Wall Street expects a half percentage rate hike at its next meeting in two weeks. Other central banks have also moved to raise interest rates to try to blunt the impact of rising prices on businesses and consumers.
During Thursday’s panel discussion, Powell suggested that “there is something to the idea of aggressive front-loading rate hikes as the Fed grapples with inflation that has hit a four-decade high.
That suggests a half-point rate hike could be on the table when Fed officials hold their next interest rate and economic policy meetings on May 3-4, Powell said. In the past, the Federal Reserve typically raised its short-term benchmark rate in more modest quarter-point increments.
Bond yields have been gaining ground as investors brace for higher interest rates. The 10-year Treasury yield rose sharply to 2.97% on Friday from 2.92% on Thursday night. hovering near its highest levels since late 2018.
US Benchmark Crude CLM22
it fell 65 cents to $103.14 a barrel. It rose 1.6% on Thursday and is up about 40% on the year. That has made gasoline more expensive, hitting consumers’ wallets more deeply. Brent Crude BRNM22,
the international standard, lost 64 cents to $107.69 a barrel.