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Asian markets tumble to 15 month lows
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IANS | 27 Jan, 2022
Stock markets in Asia have tumbled to their lowest in nearly 15 months
after Americ's central bank chief confirmed widely expected plans to
increase interest rates this year, beginning in March, The Guardian
reported.
With investors also concerned about
political tensions between Russia and Ukraine, supply chain problems and
rising oil prices, the prospect of sustained increases in the cost of
borrowing by the world's most powerful economy sent a spasm of anxiety
through financial markets on Thursday.
Luigi Speranza, chief
global economist at BNP Paribas Markets 360, now expects the Fed to
raise interest rates six times this year, after last night's hawkish
comments from Jerome Powell.
"We read Fed Chair Powell's comment
that this cycle is different from the previous one as an indication that
the Fed's bias is for a steeper tightening than the markets and we had
envisaged. We have moved our call for this year to six 25bp hikes from
four previously and now expect the fed funds target range at 2.25-2.50
per cent at end-2023, 25bp higher than we had previously forecast. Our
new base case for six hikes this year poses challenges to our bullish
outlook for US equities. However, it is not sufficient to derail it on a
standalone basis if earnings growth remains strong, in our view", The
Guardian reported.
Last month, the Fed's officials predicted they
would increase rates three times in 2022, while the markets had been
pricing in four increases.
"The Fed's gone from being the
market's best friend, to a possible enemy," said Kyle Rodda, analyst at
the online trading platform IG in Sydney, adding that the Fed was set on
"bringing inflation down, rather than protecting asset prices", the
report said.
The Nikkei in Japan led the way as it plunged more
than 3 per cent while the Kospi in Seoul found itself in similarly
negative territory. The market in Hong Kong was off 2.5 per cent and
Sydney shed nearly 2 per cent.
MSCI's broad gauge of regional markets outside Japan fell more than 2 per cent to its lowest level since November 2020.
The
FTSE100 is set to fall nearly 2 per cent when it opens on Thursday
morning, according to futures trade, with the Wall Street markets also
heading for a hefty loss.
Mike Kelly, head of global multi-asset
at PineBridge Investments in the US, said it was a sign to "get the heck
out" of US stocks. "It's all about selling longer duration assets," he
said, "so we are underexposed to US equities", the report said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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