Negative Asian markets after the close to the downside of Wall Street, which mainly saw the sell-offs on technology stocks as protagonists.
The Dow Jones lost around 280 points, or -0.8%. The S&P 500 lost 1.3%, while the Nasdaq Composite suffered a 2.3% decline.
In Asia, Chinese Big Tech stocks listed on the Hong Kong stock exchange are capitulating. Sales on Alibaba, which lost more than 4%, on Meituan and Tencent, with the hi-tech sub-index of the benchmark Hang Seng index, the Hang Seng Tech index losing more than 3%. Tokyo Stock Exchange Witnesses SoftBank Group Fall; bad for the Seoul Kakao, Naver and SK Hynix stock exchanges.
The Hong Kong Hang Seng index is currently down 1.4%, while the Nikkei 225 index on the Tokyo stock exchange is down about 1.6%; bad also Shanghai -0.22%; Sidney -0.52%, Seoul -0.78%.
US 10-year Treasury rates have soared to a new record since May 2019, discounting fears of a more hawkish Fed fueled yesterday by Federal Reserve Governor Lael Brainard’s warning.
The Fed member was forced to admit that the US central bank must act quickly and aggressively to bring inflation down.
“Inflation is really too high and subject to upside risks – said Brainard – The Commission is ready to launch stronger measures, should the indications on inflation and inflation expectations support them”. Still, according to him, the Fed’s balance sheet reduction should happen at “a rapid pace”.
The ten-year rates thus flew up to 2.6181%, exceeding the two-year rates, around 2.5878%, and thus bringing back to normal the section of the yield curve at 2-10 years, which had reversed in the sessions previous.
The publication of the minutes of the Federal Reserve relating to the last meeting of 16 March 2022 is expected today, when the FOMC, the monetary policy arm of the US central bank, raised rates on fed funds for the first time since 2018, bringing them to range between 0.25% and 0.50%.
From the dot plot, a document that contains the expectations of FOMC exponents on the future trend of rates, it emerged that the Commission expects six further rate hikes in each of the remaining meetings in 2022, up to 1.9% by the end of ‘ year.
For 2023, the forecast is for three more monetary tightens and no rate hikes in 2024.