Saturday, 30 September 2023

We are shifting our daily news to Gutzy.Asia Support us there!

Markets track US losses with rates seen rising further

HONG KONG, CHINA — Markets in Asia and Europe fell on Thursday as traders contemplated the prospect of more central bank interest rate hikes as they struggle to tame persistently high inflation.

Federal Reserve boss Jerome Powell dealt a blow to investors hoping its tightening cycle may be near an end by warning US lawmakers it “may make sense” to keep lifting.

His comments came as pressure built on the Bank of England to announce a bigger-than-expected increase at Thursday’s meeting after news that the United Kingdom’s inflation was unchanged at 8.7 per cent in May, confounding forecasts.

The European Central Bank last week joined Canada and Australia in hiking further, with Switzerland following suit on Thursday. Norway is also tipped to lift later in the day.

Turkey was also tipped to reverse course from years of unconventional economics promoted by President Recep Tayyip Erdogan and dramatically raise interest rates to fight soaring inflation and steady the troubled lira.

After holding rates last week for the first time since starting last March, speculation had been growing that the Fed was close to calling it a day altogether, thanks to slowing price rises and a softer jobs market.

However, in congressional testimony on Wednesday, Powell said: “Given how far we’ve come, it may make sense to move rates higher but to do so at a more moderate pace.”

He added that while progress was being made — inflation dropped to 4.0 per cent last month from 4.9 per cent in April — it “has consistently surprised us — and essentially all other forecasters — by being more persistent than expected”.

Two more rate hikes this year was “a pretty good guess”, he said.

The Fed has already raised its benchmark lending rate by five percentage points since March 2022, from close to zero to 5.0-5.25 per cent.

Traders say there is a 75 per cent probability officials will hike by 25 basis points at their July meeting, according to data from CME Group.

The expected increase in rates has revived worries the economy will tip into recession.

“The Fed is clearly not nearing the end of its tightening cycle and if other central banks seem poised to deliver more than a couple rate hikes, that might make it easier for the Fed to remain aggressive with tightening,” said OANDA’s Edward Moya.

“Powell said lowering inflation has a long way to go and that could very well mean that they won’t stop until the fall.”

All three main indexes on Wall Street fell for a third-straight session, and Asia followed on Thursday.

Tokyo, Sydney, Singapore, Manila, Wellington, Mumbai, Wellington, Bangkok and Jakarta were all in the red, though Seoul eked out a gain.

London, Paris and Frankfurt were also sharply lower at the open.

Hong Kong and Shanghai were closed.

Markets across Asia have gone into reverse this week, having enjoyed a healthy run-up in previous weeks on hopes that the tightening cycle was nearing an end and on talk that China was preparing a raft of stimulus measures.

The optimism was fanned by the central bank’s decision to cut borrowing costs last week, though a smaller-than-expected reduction in the main benchmark rate this week knocked confidence.

The failure of Beijing to unveil any concrete policies to kickstart the stuttering economy has fed fears that the recovery from a Covid lockdown-induced slowdown has already come to an end.

Analysts said the traders are now looking ahead to a key meeting next month that will be headed by President Xi Jinping.


Notify of
Oldest Most Voted
Inline Feedbacks
View all comments

Latest posts

Election surprises and certainties: Dissecting Tharman’s presidential win

In the 2023 Presidential Election, Mr. Tharman Shanmugaratnam secured a stunning 70.4% landslide victory, surprising many, including himself. Despite expectations that TKL would win the opposition votes, voters from both camps showed a preference for Tharman's charisma and perceived competency. As Singapore reflects on the outcome, questions arise about the election's fairness and the real implications of Tharman's dominant win.

Volunteer as a Polling and Counting Agent for Singapore’s 2023 Presidential Election

For the upcoming Singapore Presidential Election on 1st September, members of the civil society have spearheaded an initiative to strengthen our democratic fabric. We invite committed individuals to join us as Polling and Counting Agents, standing together for a transparent, fair, and just election. This vote counting exercise, organized by members of civil society, is not specifically in support of Mr Tan Kin Lian, a candidate in the upcoming Presidential Election. It's an exercise in active citizenry. Nonetheless, Mr Tan endorses this initiative, which hinges on his candidacy, championing transparency, and has given permission for the results to be shared publicly.

Reflections from the Centenary: The Legacy of LKY and Singapore’s Future

Gilbert Goh reflects on the LKY centenary event: an inspiring showcase of a leader's global legacy juxtaposed against current challenges, urging Singapore to continue its path of progress.

Lim Tean advocates for Tan Kin Lian: A visionary leader for Singapore’s Presidency

In his speech at Mr Tan Kin Lian's launch of his presidential bid, Mr Lim Tean passionately championed the need for a truly Independent President. Highlighting Mr Tan Kin Lian's unique credentials and genuine concern for the wellbeing of Singaporeans, the Peoples Voice leader emphasized the pressing challenges of rising living costs and job insecurities faced by the public. Mr Lim depicted Mr Tan Kin Lian as a beacon of hope for the nation, advocating for a leader who genuinely understands and represents the people’s aspirations.

Tan Jee Say endorses Tan Kin Lian for President: A courageous, genuine, and humble...

In advocating for a truly representative leader, Tan Jee Say underscored Tan Kin Lian's humility, courage, and genuine dedication. Highlighting the pressing need for restored public trust and effective independence, Tan Jee Say emphasized that Tan Kin Lian, as the 'People's President', would bring back hope to Singaporeans and champion true democracy

Tan Kin Lian’s pledge: Rekindling unity and charting a vigorous future for Singapore

In the press conference to announce his bid for the Singapore presidency, Tan Kin Lian emphasizes safeguarding Singapore's reserves and strengthening public service integrity. Drawing on his 30-year leadership at NTUC Income, he envisions a future with affordable living, accessible housing, and job stability, pledging collaboration with the government for a united nation.

Strengthening Singapore’s political foundations: A call to action by Leong Mun Wai on Singapore’s...

Leong Mun Wai urges Singaporeans to strengthen political checks and balances, emphasizing, 'The best is yet to be for Singapore if we dare to make the right decision in upcoming elections.

Trending posts