Asian stocks plunge on Fed panic, recession risk By Investing.com

© Reuters.

Anbar Warwick

Investing.com – Asian shares tumbled on Wednesday as hawkish comments from Federal Reserve officials sparked more fears of rising interest rates, prompting investors to pull out of risk-driven assets in favor of the U.S. dollar.

The tech-heavy index was the worst performer in the region. South Korean stocks fell nearly 3 percent to a two-year low, while the Hong Kong index fell 2.4 percent to an 11-year low. Their losses mirrored a similar trend on Wall Street, as investors discounted the industry’s future gains against rising yields.

Japan’s index fell 2%, while it fell 2.2%.

Risk-driven market sentiment was hit by hawkish comments from Fed officials James Bullard and Neil Kashkari, who warned the U.S. faces serious recession risks and could see further rate hikes.

San Francisco Fed President Mary Daly also said the bank is trying to maintain a balance between slowing inflation and avoiding it. economic recession.

Their comments pushed U.S. inflation to a fresh 20-year high while pushing U.S. inflation to a key level near 4%. This, combined with a slew of weak data from major economies, led to sharp losses across most asset classes.

It came just days after making hawkish remarks and warning that it was willing to risk economic pain in the fight against inflation. Rising interest rates have been the biggest pressure on stocks this year.

Asian stocks were also weakly led by Wall Street on Wednesday, as Wall Street is now close to losing all of its gains over the past two years after the Federal Reserve sharply reversed its accommodative monetary policy.

China’s blue-chip index fell 1.3 percent on Wednesday as sentiment soured as it hit a record low.

Chinese stocks are trading near five-month lows but have outperformed their Asian counterparts this year thanks to government stimulus.

However, a weakening and potential recovery in COVID-19 cases is expected to weigh heavily on the economy this year.

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