MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.3%, Australian shares declined 2.34%, while Nikkei stock index shed 1.47%
Asian share markets tumbled on Friday, tracking losses on Wall Street, as lingering concerns over the Federal Reserve’s tightening and weaker-than-expected economic and earnings data weighed on sentiment ahead of a Fed policy meeting next week.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.3%, dragged by Australian shares which declined 2.34%, while Japan’s Nikkei stock index shed 1.47%.
Nasdaq futures dropped 1.2% in Asian trading, hurt by Netflix Inc forecasting weak first-quarter subscriber growth after the close. The S&P 500 e-minis, were down 0.68%.
The selloff of U.S. stocks yesterday was brutal and will dominate Asia, said Rob Carnell, chief economist at ING in Singapore.
But there are pockets of optimism like China’s more accommodating moves on monetary policy, he added.
The Nasdaq fell late in the U.S. session, to end 1.3% lower, as investors anxiously await the Fed’s FOMC meeting next week for details on how it intends to tackle high inflation.
The moves extended to Chinese shares with the Hong Kong benchmark dropping 0.75% after posting its best day in six months the day before and Chinese blue chips shedding 0.8%, also after gains the day before.
China cut its benchmark mortgage rates on Thursday, the latest move in a burst of monetary easing aimed at propping up an economy soured by a troubled property sector and worries over the Omicron variant of coronavirus.
Analysts at Nomura believe the impact from cuts to benchmark lending rates would be quite limited, as these cuts are too small to have a material impact.
Market sentiment was also weakened by comments made by U.S. Treasury Secretary Janet Yellen on inflation, said Kyle Rodda, market analyst at IG Markets.
Less than a week out from the FOMC meeting, investors are worried that the central bank is going to flag aggressive rate hikes and an imminent and rapid unwind of its balance. In effect, it may throw the stock market under the bus to stamp out inflation, Rodda said.
Yellen said on Thursday she was confident the Federal Reserve and the Biden administration would take steps needed to bring down inflation over the course of 2022, provided the COVID-19 pandemic is brought under control.
