On Thursday, most Asian stocks were lower after Wall Street experienced its weakest monthly performance in two years, as new Federal Reserve Chair Jerome Powell’s hawkish-sounding remarks resonated across the wider risk asset markets.
In recent weeks, investors have been worried about the increasing interest rates in progressive economies, headed by the United States, could exhaust global growth.
In his first public appearance as the Fed chair at a congressional hearing on Tuesday, Powell promised to thwart the economy from overheating while conforming to the plan to slowly lift interest rates.
Those words revived speculation in equity markets over U.S monetary tightening this year occurring faster than expected, sending concerns that higher borrowing costs could adversely affect corporate activity and slow economic growth.
Japan’s Nikkei 225 fell 1.76 percent after dipping over 1 percent yesterday. Hong Kong’s Hang Seng Index slid 0.21 percent, while the Kospi fell 1.17 percent.
Chinese markets were the only ones resided in positive territory after data issued from a private survey indicated that China’s manufacturing sector is soaring near a six-month high. Shanghai shares were up 0.15 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 percent and directed to its third day of losses.
Australian stocks were down 0.7 percent.
Asian losses came amid a wide sell-off on Wall Street, where the Dow and S&P 500 topped their worst months since January 2016 overnight after enduring severe losses early in February.
The Federal Reserve’s last round of economic forecasts in December signaled to three rate hikes this year, but Powell’s speech impelled investors to bet on four rate hikes instead.
“The markets will try to further price in prospects of accelerated Fed tightening if the U.S. employment report on March 9 and inflation data on March 12 point to growth in wages and a rise in prices,” Senior Strategist at Tokyo’s Sumitomo Mitsui Asset Management, Masahiro Ichikawa, said.
“In such a case we could see another round of rising long-term Treasury yields, dollar appreciation and a decline in U.S. equities.”
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