SINGAPORE – Asia-Pacific equities struggled in the direction of trading on Friday, following heavy falls on Wall Street, as investors consider the possibility of an aggressive tightening of monetary policy leading to a recession.
The Nikkei 225 in Japan fell 1.64% in afternoon trading, as shares of conglomerate SoftBank Group fell about 4%, while the Topix index fell 1.54%. Kospi in South Korea fell 0.53%.
In Hong Kong, the Hang Seng index rebounded from previous losses to rise 0.78% in the afternoon, and the shares of AIA life insurer rose more than 2%. Shares in mainland China were mixed, with Shanghai Composite slightly lower, while Shenzhen Component gained 0.129%.
In Australia, the S & P / ASX 200 fell 1.86%.
While markets say central banks need to do more to control inflation, the more central banks do to control inflation, the more they shock the markets.
David Roche
President and global strategist, Independent Strategy
The broader Asia-Pacific equities index outside of Japan fell 0.43%.
“We still maintain our vision of overweight versus bonds,” said Suresh Tantia, senior investment strategist at Credit Suisse’s APAC chief investment officer.
“No more inconveniences can be ruled out because at the moment the markets are very volatile, they are trading according to the flow of news and according to the expectations of the Fed, but at current levels, it really doesn’t make sense to sell them. Fed rates are stabilizing, then we should start seeing a recovery in the stock market, “he said.
Wall Street shares fell sharply overnight, and the S&P 500 fell 3.25% to 3,666.77. The Dow Jones Industrial Average was down 741.46 points, or 2.42%, to 29,927.07. The Nasdaq Composite fell 4.08% to 10,646.10.
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Bank of Japan rate decision
The Bank of Japan said on Friday that it would keep its monetary policy ultra-easy.
Following this decision, the Japanese yen weakened more than 1% to $ 134.02, although it was still stronger compared to the levels above 135 seen against the green dollar in early ‘this week.
The decision of the Japanese central bank contrasts sharply with that of its global counterparts. Earlier this week, the US Federal Reserve, the Bank of England and the Swiss National Bank raised their interest rate hikes.
“The contradiction is: while the markets say central banks need to do more to control inflation, the more central banks do to control inflation, the more they shock the markets. You’re in that state right now.” David Roche, president and global strategist for Independent Strategy, told CNBC’s “Squawk Box Asia” on Friday.
Beyond concerns about tightening monetary conditions, other factors such as disruptions caused by China’s zero-covid policy and the ongoing war between Russia and Ukraine have also further contributed to the uncertain economic outlook.
Coins and oils
The US dollar index, which tracks the green dollar against a basket of its peers, was at 104,275 after a recent drop from levels above 105.
The Australian dollar changed hands at $ 0.7019, with a previous high of $ 0.7053.
Oil prices were lower in the morning on the Asian schedule, with Brent crude oil’s international benchmark futures falling 0.58% to $ 119.11 a barrel. U.S. crude oil futures fell 0.73% to $ 116.73 a barrel.