Hong Kong’s Hang Seng index drops more than 3% following Wall Street tumble

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SINGAPORE — Shares in Asia-Pacific declined in Friday morning trade after an overnight drop on Wall Street sent the Dow Jones Industrial Average to its worst day since 2020.

In Japan, the Nikkei 225 dipped 0.69% as shares of SoftBank Group dropped about 3%. The Topix index traded 0.14% lower. Japanese stocks returned to trade on Friday after being closed for holidays much of this week.

South Korea’s Kospi dropped 1.24%. The S&P/ASX 200 in Australia shed 0.8%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.53% lower.

With no obvious news flow to explain the sharp reversal, it seems instead that the relief of Powell indicating 75bp moves were likely a step too far gave way to a renewed focus on high inflation and a challenging growth outlook.
Taylor Nugent
economist, National Australia Bank

The Reserve Bank of Australia is set to release its statement on monetary policy at 9:30 a.m. HK/SIN on Friday. On Tuesday, the Australian central bank hiked its interest rate for the first time in more than a decade.

Overnight on Wall Street, the Dow Jones Industrial Average plunged 1,063.09 points — or 3.12% — to 32,997.97. The S&P 500 fell 3.56% to 4,146.87 while the Nasdaq Composite plummeted 4.99% to 12,317.69.

Thursday’s moves on Wall Street were a sharp reversal from a Wednesday rally after the U.S. Federal Reserve increased its benchmark interest rate by half a percentage point, in line with market expectations and also the biggest hike in two decades.

Fed Chairman Powell also indicated raising rates by 75 basis points at a time is “not something the committee is actively considering.”

“With no obvious news flow to explain the sharp reversal, it seems instead that the relief of Powell indicating 75bp moves were likely a step too far gave way to a renewed focus on high inflation and a challenging growth outlook,” Taylor Nugent, an economist at National Australia Bank, wrote in a Friday note.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.57 after a recent jump from below 103.

The Japanese yen traded at 130.36 per dollar, weaker as compared to levels below 130 seen against the greenback earlier in the week. The Australian dollar was at $0.7119 after yesterday’s decline from levels above $0.721.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.37% to $111.31 per barrel. U.S. crude futures climbed 0.39% to $108.68 per barrel.

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