Asia Business

Stock markets dropped further Friday on prospects of more aggressive rises to interest rates to fight sky-high inflation, renewing concerns over the global economy entering recession next year.

After a healthy rally in recent weeks fuelled by signs that price rises were slowing, the US Federal Reserve, European Central Bank and Bank of England this week crushed any Christmas spirit by hiking borrowing costs again by sizeable amounts and warning of more pain.

While inflation in most countries has started coming down — helped by a drop in energy costs — it remains at multi-decade highs.

Observers have warned that economies could be heading for a period of stagflation where prices keep rising but growth stalls.

“In a nutshell, it is all about fears over a sharper economic slowdown in 2023 than previously expected,” noted Fawad Razaqzada, market analyst at City Index trading group.

“While macro data have been weak of late, there was still hope that the downturn might be short-lived and that a recession might be avoided in some regions altogether, amid signs of inflation peaking in some regions like the US.”

The latest rate hikes came as data showed US and UK retail sales dropping in November as consumers — key drivers of growth — feel the pinch from high prices and rate hikes.

– Recession on horizon? –

“With central banks on both sides of the pond suggesting they have more work to tame inflation, hiking interest rates into a dimming macro environment will undoubtedly trigger a recession,” said SPI Asset Management’s Stephen Innes.

“The question is just how profound. Forget inflation; Asia traders are now worried about a global recession.”

Eurozone and London shares dropped in mid-afternoon trading, while Wall Street stocks also fell shortly after opening.

Earlier, Asia had also seen losses, with Tokyo closing down 1.9 percent.

On the upside, Hong Kong rose on progress in talks over allowing US officials to audit Chinese firms listed in New York, easing concerns about a possible delisting of some big names such as Alibaba and Tencent.

The news provided a little more help to Hong Kong traders, whose sentiment has been lifted also by China’s shift away from the economically damaging zero-Covid policy as well as moves to open the city further to overseas visitors.

And a report in the city’s South China Morning Post said the border with mainland China would be fully reopened next month, providing another much-needed boost to the beleaguered economy.

However, the mood was soured a little by a US decision to put 36 Chinese companies including top producers of advanced computer chips on a trade blacklist, severely restricting their access to any US technology.

– Key figures around 1445 GMT –

London – FTSE 100: DOWN 1.2 percent at 7,337.14 points

Frankfurt – DAX: DOWN 0.4 percent at 13,932.71

Paris – CAC 40: DOWN 1.0 percent at 6,456.45

EURO STOXX 50: DOWN 0.6 percent at 3,812.40 

New York – Dow: DOWN 0.6 percent at 33,005.58 

Tokyo – Nikkei 225: DOWN 1.9 percent at 27,527.12 (close)

Hong Kong – Hang Seng Index: UP 0.4 percent at 19,450.67 (close)

Shanghai – Composite: FLAT at 3,167.86 (close)

West Texas Intermediate: DOWN 3.2 percent at $73.65 per barrel

Brent North Sea crude: DOWN 3.1 percent at $78.73 per barrel

Euro/dollar: UP at $1.0645 from $1.0627 on Thursday

Pound/dollar: UP at $1.2216 from $1.2175

Euro/pound: DOWN at 87.15 pence from 87.26 pence

Dollar/yen: DOWN at 136.90 yen from 137.80 yen

Six Macau casino firms agreed Friday to invest a total of 118.8 billion patacas ($15 billion) after being granted 10-year operating licences, with the bulk of the money pledged to non-gaming projects.

The former Portuguese colony is the only place in China where casinos are allowed, and issues just six operating concessions for a multi-billion-dollar industry that, until the pandemic hit, was bigger than Las Vegas.

Macau has been keen to diversify away from gambling into tourism and leisure for decades, but with mixed results.

The government confirmed last month that the six incumbents all won licence renewals, beating back a surprise bid from a newcomer firm linked to Malaysian gaming and resorts giant Genting.

The casino firms promised to spend 108.7 billion patacas — more than 90 percent of their investment total — on “exploring overseas customer markets and developing non-gaming projects”, the government said Friday.

Such projects would cover the “convention and exhibition business, entertainment and performances, sports events, culture and art, health care, and themed amusement”, the government added.

Macau’s leader Ho Iat-seng said he hoped the operators would contribute to Macau’s development and “deliver on their corporate social responsibilities regarding protection of local employment and promotion of upward mobility of local workers”.

The six firms — MGM China, Wynn Macau, Sands China, Galaxy Entertainment, Melco Resorts, and SJM Holdings — will begin their new contract period on January 1.

Shares in the operators have spiked more than 60 percent in the past three weeks, according to Bloomberg, as news of the licence renewals emerged and China loosens coronavirus restrictions.

But all are still trading well below where they were before the pandemic. 

Macau’s gaming sector, which has been limping for nearly three years, was further battered this year as the Omicron variant led to a cycle of lockdowns, testing and border closures for residents and kept mainland Chinese tourists away.

The casinos are on track for their weakest annual revenue on record, with only 38.7 billion patacas recorded between January and November — down 86 percent from the same period in 2019.

Even if pandemic measures are fully lifted, it is unlikely they will return to their headiest, freewheeling days.

Chinese President Xi Jinping has spearheaded an anti-corruption campaign that has increased scrutiny of the high rollers and officials who travel to gamble in Macau, where money laundering is common.

For decades, Macau’s gaming industry was run as a monopoly by casino magnate Stanley Ho, but in 2002 more operators were brought in and issued 20-year concessions as part of a liberalisation effort.

In January, authorities slashed the licence period to 10 years and unveiled regulations seeking to increase local ownership and government supervision.

Stock markets dropped further Friday on prospects of more aggressive rises to interest rates to fight sky-high inflation, renewing concerns over the global economy entering recession next year.

After a healthy rally in recent weeks fuelled by signs that price rises were slowing, the US Federal Reserve, European Central Bank and Bank of England this week crushed any Christmas spirit by hiking borrowing costs again by sizeable amounts and warning of more pain.

While inflation in most countries has started coming down — helped by a drop in energy costs — it remains at multi-decade highs.

And observers have warned that economies could be heading for a period of stagflation where prices keep rising but growth stalls.

“In a nutshell, it is all about fears over a sharper economic slowdown in 2023 than previously expected,” noted Fawad Razaqzada, market analyst at City Index trading group.

“While macro data have been weak of late, there was still hope that the downturn might be short-lived and that a recession might be avoided in some regions altogether, amid signs of inflation peaking in some regions like the US.”

The latest rate hikes came as data showed US and UK retail sales dropping in November as consumers — key drivers of growth — feel the pinch from high prices and rate hikes.

– Recession on horizon? –

“With central banks on both sides of the pond suggesting they have more work to tame inflation, hiking interest rates into a dimming macro environment will undoubtedly trigger a recession,” said SPI Asset Management’s Stephen Innes.

“The question is just how profound. Forget inflation; Asia traders are now worried about a global recession.”

Wall Street tumbled Thursday, with the Nasdaq losing more than three percent as tech firms took another blow.

And the losses carried through to Asia, where Tokyo closed down 1.9 percent.

Eurozone indices dropped approaching the half-way stage but less sharply compared with Thursday.

On the upside, Hong Kong rose on progress in talks over allowing US officials to audit Chinese firms listed in New York, easing concerns about a possible delisting of some big names such as Alibaba and Tencent.

The news provided a little more help to Hong Kong traders, whose sentiment has been lifted also by China’s shift away from the economically damaging zero-Covid policy as well as moves to open the city further to overseas visitors.

And a report in the city’s South China Morning Post said the border with mainland China would be fully reopened next month, providing another much-needed boost to the beleaguered economy.

However, the mood was soured a little by a US decision to put 36 Chinese companies including top producers of advanced computer chips on a trade blacklist, severely restricting their access to any US technology.

– Key figures around 1145 GMT –

London – FTSE 100: DOWN 1.3 percent at 7,333.40 points

Frankfurt – DAX: DOWN 0.8 percent at 13,870.08

Paris – CAC 40: DOWN 1.3 percent at 6,438.84

EURO STOXX 50: DOWN 1.1 percent at 3,795.35

Tokyo – Nikkei 225: DOWN 1.9 percent at 27,527.12 (close)

Hong Kong – Hang Seng Index: UP 0.4 percent at 19,450.67 (close)

Shanghai – Composite: FLAT at 3,167.86 (close)

New York – Dow: DOWN 2.3 percent at 33,202.22 (close)

West Texas Intermediate: DOWN 1.8 percent at $74.71 per barrel

Brent North Sea crude: DOWN 1.8 percent at $79.74 per barrel

Euro/dollar: UP at $1.0630 from $1.0627 on Thursday

Pound/dollar: UP at $1.2187 from $1.2175

Euro/pound: DOWN at 87.22 pence from 87.26 pence

Dollar/yen: DOWN at 137.04 yen from 137.80 yen

Most stock markets fell Friday as investors contemplated interest rates going higher than expected for an extended period after central banks reaffirmed their commitment to bringing down inflation.

After a healthy rally in recent weeks fuelled by signs that price rises were slowing, the US Federal Reserve and European Central Bank this week crushed any Christmas spirit by hiking borrowing costs again and warning of more pain to come.

While inflation in most countries has started coming down from the levels seen earlier this year — helped by a drop in energy costs — it remains at multi-decade highs.

And observers have warned that economies could be heading for a period of stagflation where prices keep rising but growth stalls.

After a rough week for markets, anxiety was enhanced on Wednesday after the Fed hiked rates as expected but indicated they would likely have to go higher than had been forecast, ramping up fears of a recession.

That was followed by similar moves by the ECB on Thursday, with its boss Christine Lagarde warning: “We have more ground to cover, we have longer to go and we are in for a long game.”

The Bank of England also lifted rates and said more hikes were on the cards.

The decisions came as data also showed that almost a year of monetary tightening was hitting the economy more and more, with US retail sales dropping in November as American consumers — the key driver of growth — began to feel the pinch.

– Recession on horizon? –

“With central banks on both sides of the pond suggesting they have more work to tame inflation, hiking interest rates into a dimming macro environment will undoubtedly trigger a recession,” said SPI Asset Management’s Stephen Innes.

“The question is just how profound. Forget inflation; Asia traders are now worried about a global recession.”

All three main indexes on Wall Street tumbled Thursday, with the Nasdaq losing more than three percent as tech firms took another blow.

And the losses carried through to Asia, where Tokyo gave up 1.9 percent while Sydney, Seoul, Singapore, Mumbai, Taipei, Bangkok and Manila were also in the red. Shanghai was barely moved.

However, the dollar eased back slightly after Thursday’s rally.

Hong Kong rose, supported by signs of progress in talks on allowing US officials to audit Chinese firms listed in New York, easing concerns about a possible delisting of some big names such as Alibaba and Tencent.

The news provided a little more help to Hong Kong traders, whose sentiment has been lifted by China’s shift away from the economically damaging zero-Covid policy as well as moves to open the city further to overseas visitors.

And a report in the city’s South China Morning Post said the border with mainland China would be fully reopened next month, providing another much-needed boost to the beleaguered economy.

However, the mood was soured a little by a US decision to put 36 Chinese companies including top producers of advanced computer chips on a trade blacklist, severely restricting their access to any US technology.

London, Paris and Frankfurt opened mixed a day after suffering hefty losses.

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: DOWN 1.9 percent at 27,527.12 (close)

Hong Kong – Hang Seng Index: UP 0.4 percent at 19,450.67 (close)

Shanghai – Composite: FLAT at 3,167.86 (close)

London – FTSE 100: DOWN 0.1 percent at 7,418.88

Euro/dollar: UP at $1.0640 from $1.0627 on Thursday

Dollar/yen: DOWN at 137.16 yen from 137.80 yen

Pound/dollar: UP at $1.2200 from $1.2175

Euro/pound: DOWN at 87.25 pence from 87.26 pence

West Texas Intermediate: DOWN 0.5 percent at $75.77 per barrel

Brent North Sea crude: DOWN 0.3 percent at $80.99 per barrel

New York – Dow: DOWN 2.3 percent at 33,202.22 (close)

Asian stocks fell Friday as investors contemplated interest rates going higher than expected for an extended period after central banks reaffirmed their commitment to bringing down inflation.

After a healthy rally in recent weeks fuelled by signs that price rises were slowing, the US Federal Reserve and European Central Bank this week crushed any Christmas spirit by hiking borrowing costs again and warning of more pain to come.

While inflation in most countries has started coming down from the highs seen earlier this year — helped by a drop in energy costs — they remain at multi-decade highs.

And observers have warned that economies could be heading for a period of stagflation where prices keep rising but growth stalls.

After a rough week for markets, anxiety was enhanced on Wednesday after the Fed hiked rates as expected but indicated they would likely have to go higher than had been expected, ramping up fears of a recession.

That was followed by similar moves by the ECB on Thursday, with its boss Christine Lagarde warning: “We have more ground to cover, we have longer to go and we are in for a long game.”

The Bank of England also lifted rates and said more hikes were on the cards.

The decisions came as data also showed that almost a year of monetary tightening was hitting the economy more and more, with US retail sales dropping in November as American consumers — the key driver of growth — began to feel the pinch.

– Recession on horizon? –

“With central banks on both sides of the pond suggesting they have more work to tame inflation, hiking interest rates into a dimming macro environment will undoubtedly trigger a recession,” said SPI Asset Management’s Stephen Innes.

“The question is just how profound. Forget inflation; Asia traders are now worried about a global recession.”

All three main indexes on Wall Street tumbled Thursday, with the Nasdaq losing more than three percent as tech firms took another blow, while Paris and Frankfurt were also off more than three percent.

And the losses carried through to Asia, where Tokyo gave up more than one percent while Sydney, Seoul, Singapore, Wellington, Taipei, Jakarta and Manila were also in the red.

However, the dollar eased back slightly after Thursday’s rally.

Hong Kong and Shanghai also sagged, though the losses were less severe, with traders supported by signs of progress in talks on allowing US officials to audit Chinese firms listed in New York, easing concerns about a possible delisting of some big names such as Alibaba and Tencent.

The news provided a little more help to Hong Kong traders, whose sentiment has been lifted by China’s shift away from the economically damaging zero-Covid policy as well as moves to open the city further to overseas visitors.

And a report in the city’s South China Morning Post said the border with mainland China would be fully reopened next month, providing another much-needed boost to the beleaguered economy.

However, the mood was soured a little by a US decision to put 36 Chinese companies including top producers of advanced computer chips on a trade blacklist, severely restricting their access to any US technology.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.5 percent at 27,620.66 (break)

Hong Kong – Hang Seng Index: DOWN 0.2 percent at 19,327.32

Shanghai – Composite: DOWN 0.1 percent at 3,164.07

Euro/dollar: UP at $1.0648 from $1.0627 on Thursday

Dollar/yen: DOWN at 137.28 yen from 137.80 yen

Pound/dollar: DOWN at $1.2211 from $1.2175

Euro/pound: DOWN at 87.20 pence from 87.26 pence

West Texas Intermediate: UP 0.2 percent at $76.26 per barrel

Brent North Sea crude: UP 0.2 percent at $81.40 per barrel

New York – Dow: DOWN 2.3 percent at 33,202.22 (close)

London – FTSE 100: DOWN 0.9 percent at 7,426.17 (close)

Global stocks sank Thursday as central banks hiked interest rates again and signalled they needed to go higher to tame inflation.

Meanwhile, downbeat economic data out of China and the United States fanned recession fears. 

Both the Bank of England and the European Central Bank mirrored the Fed’s half-point hike on Wednesday to tackle soaring inflation, with Norway and Switzerland raising rates as well.

Sentiment was already hammered on Wednesday after the Fed suggested that it saw US rates topping out next year at 5.1 percent, higher than markets had predicted. 

Meanwhile the BoE, which lifted its key rate to the highest level in 14 years, warned that labour market tightness and inflationary pressures justified “a further forceful monetary policy response”.

The ECB delivered a similar message.

ECB president Christine Lagarde warned that inflation in the 19-nation eurozone was still “far too high” and more action needed to be taken. 

The world’s major central banks are seeking to dampen red-hot inflation, which has been fuelled partly by fallout from Russia’s invasion of Ukraine.

“We have more ground to cover, we have longer to go and we are in for a long game,” Lagarde told reporters. 

Share prices headed south after the rate decisions and kept falling.

Wall Street’s main indices were all down more than two percent in late morning trading.

In Europe, both Frankfurt suffered losses of more than three percent.

“The collapse in equity valuations comes as traders face up to an impending economic collapse where central banks seem to exacerbate rather than remedy the situation,” said Joshua Mahony, senior market analyst at online trading platform IG.

– Fresh recession fears –

Rising rates fan recession concerns because they push up loan repayments for consumers and companies, denting expenditure, investment and economic activity.

Market analyst Patrick O’Hare at Briefing.com said “these (central bank) policy moves were expected, but that still hasn’t helped matters given the understanding that higher rates will inevitably weigh on economic activity.” 

Economic data released Thursday fed recession fears.

China’s retail sales plunged last month as Covid restrictions and a property market crisis hammered the world’s second-largest economy.

In the United States, retail sales slid by 0.6 percent in November from October, with industrial output dropping as well.

The Fed warned Wednesday that the world’s biggest economy would grow less than expected next year.

The ECB said Thursday the eurozone was likely in a shallow recession, as Britain’s economy is expected to continue contracting through next year.

Oil prices slid on the dimmer economic prospects.

“The raising of inflation forecasts and downgrading of growth forecasts with interest rates remaining higher for longer appear to be re-rating market expectations of the demand outlook over the course of the next few months,” said Michael Hewson at CMC Markets.

– Key figures around 1630 GMT –

New York – Dow: DOWN 2.2 percent at 33,207.78 points

EURO STOXX 50: DOWN 3. percent at 3,8

London – FTSE 100: DOWN 0.9 percent at 7,426.17 (close)

Frankfurt – DAX: DOWN 3.3 percent at 13,986.23 (close)

Paris – CAC 40: DOWN 3.1 percent at 6,522.77 (close)

Tokyo – Nikkei 225: DOWN 0.4 percent at 28,051.70 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 19,368.59 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,168.65 (close)

Euro/dollar: DOWN at $1.0648 from $1.0684 on Wednesday

Dollar/yen: UP at 137.65 yen from 135.45 yen

Pound/dollar: DOWN at $1.2221 from $1.2424

Euro/pound: UP at 87.13 pence from 85.96 pence

Brent North Sea crude: DOWN 2.0 percent at $81.02 per barrel

West Texas Intermediate: DOWN 2.3 percent at $75.49 per barrel

burs-rl/rox

Global stocks sank Thursday as central banks hiked interest rates again and signalled they needed to go higher to fight inflation.

Both the Bank of England and the European Central Bank mirrored the Fed’s half-point hike on Wednesday to tackle soaring inflation, after rate increases in Norway and Switzerland.

Sentiment was hammered after the Fed suggested that it saw US rates topping out next year at 5.1 percent, higher than markets had predicted. 

Meanwhile the BoE, which lifted its key rate to the highest level in 14 years, warned that labour market tightness and inflationary pressures justified “a further forceful monetary policy response”.

The ECB delivered a similar message.

“Inflation remains far too high and is projected to stay above the target for too long,” it said.

ECB president Christine Lagarde warned “we should expect to raise interest rates at a 50 basis-point pace for a period of time”.

Market analyst Patrick O’Hare at Briefing.com said “these policy moves were expected, but that still hasn’t helped matters given the understanding that higher rates will inevitably weigh on economic activity.” 

Wall Street opened with deeper losses than it posted on Wednesday following the Fed’s hikes. The Dow dropped 1.0 percent at the start of trading. 

The S&P 500 fell 1.2 and tech-heavy Nasdaq Composite 1.4 percent.

– Fresh recession fears –

In Europe, London shed 0.6 percent, while Frankfurt and Paris tumbled 2.4 percent.

The Fed also warned that the world’s biggest economy would grow less than expected next year, fuelling fresh recession fears.

Data released Thursday showing retail sales sliding by 0.6 percent in November from October, as well a drop in industrial output, fanned those fears.  

The BoE and ECB also had downbeat messages about growth.

Rising rates fan recession concerns because they push up loan repayments for consumers and companies, denting expenditure, investment and economic activity.

At the same time, however, the world’s major central banks are seeking to dampen red-hot inflation, which has been fuelled partly by fallout from Russia’s invasion of Ukraine.

Recent official data painted a picture of slowing inflation in Britain and the United States, although consumer prices remain elevated.

“The interest rate hikes keep on coming and this trend is almost certainly going to remain intact in early 2023,” noted AJ Bell investment director Russ Mould.

“Raising rates makes it more expensive for consumers and businesses to borrow money and theoretically causes a reduction in spending and investment which should help to ease the economy and bring down prices.

“This takes time to work its way through the system and so central banks will continue their rate hiking path until there is adequate evidence to support a shift in policy.”

Markets had rallied earlier this week after data showed the US consumer price index rose less than forecast in November, marking a fifth straight slowdown and the lowest level since December last year.

But the Fed appeared less inclined to accept that the recent figures were enough to indicate enough progress was being made.

“Fifty basis points is still a historically large increase, and we still have some ways to go,” Fed boss Jerome Powell told reporters after the announcement.

Oil prices slid on fears recession would dent crude demand.

– Key figures around 1430 GMT –

London – FTSE 100: DOWN 0.6 percent at 7,451.03 points

Frankfurt – DAX: DOWN 2.4 percent at 14,112.11

Paris – CAC 40: DOWN 2.4 percent at 6,566.64

EURO STOXX 50: DOWN 2.6 percent at 3,872.25

New York – Dow: DOWN 1.0 percent at 33,624.24

Tokyo – Nikkei 225: DOWN 0.4 percent at 28,051.70 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 19,368.59 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,168.65 (close)

Euro/dollar: UP at $1.0707 from $1.0684 on Wednesday

Dollar/yen: UP at 136.51 yen from 135.45 yen

Pound/dollar: DOWN at $1.2321 from $1.2424

Euro/pound: UP at 86.91 pence from 85.96 pence

Brent North Sea crude: DOWN 0.5 percent at $82.25 per barrel

West Texas Intermediate: DOWN 0.6 percent at $76.79 per barrel

burs-rl/jj

Global stocks sank Thursday and the dollar rose after the US Federal Reserve hiked interest rates again and signalled they would go higher to fight inflation.

Markets were also on tenterhooks ahead of expected rate increases from the Bank of England and the European Central Bank.

Both are expected to mirror the Fed’s half-point hike to tackle soaring inflation, after rate increases also in Norway and Switzerland.

Sentiment was hammered Thursday after the Fed suggested that it saw US rates topping out next year at 5.1 percent, higher than markets had predicted.

“Equity markets are back in the red… as investors reel from the nasty shock delivered by the Fed and look ahead to central bank rate decisions on the agenda today,” said Oanda analyst Craig Erlam.

“The question now becomes whether other central banks will take a similarly hawkish position against the markets and ruin any hope of a Santa rally this year.”

The Fed also warned that the world’s biggest economy would grow less than expected next year, fuelling fresh recession fears.

Rising rates fan recession concerns because they push up loan repayments for consumers and companies, denting expenditure, investment and economic activity.

At the same time, however, the world’s major central banks are seeking to dampen red-hot inflation, which has been fuelled partly by fallout from Russia’s invasion of Ukraine.

Recent official data painted a picture of slowing inflation in Britain and the United States, although consumer prices remain elevated.

“The interest rate hikes keep on coming and this trend is almost certainly going to remain intact in early 2023,” noted AJ Bell investment director Russ Mould.

“Raising rates makes it more expensive for consumers and businesses to borrow money and theoretically causes a reduction in spending and investment which should help to ease the economy and bring down prices.

“This takes time to work its way through the system and so central banks will continue their rate hiking path until there is adequate evidence to support a shift in policy.”

Markets had rallied earlier this week after data showed the US consumer price index rose less than forecast in November, marking a fifth straight slowdown and the lowest level since December last year.

But the Fed appeared less inclined to accept that the recent figures were enough to indicate enough progress was being made.

“Fifty basis points is still a historically large increase, and we still have some ways to go,” Fed boss Jerome Powell told reporters after the announcement.

Oil prices rose on lingering concerns over slowing global energy demand, dealers said. 

– Key figures around 1120 GMT –

London – FTSE 100: DOWN 0.4 percent at 7,468.62 points

Frankfurt – DAX: DOWN 1.1 percent at 14,295.23

Paris – CAC 40: DOWN 1.1 percent at 6,655.77

EURO STOXX 50: DOWN 1.2 percent at 3,926.88

Tokyo – Nikkei 225: DOWN 0.4 percent at 28,051.70 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 19,368.59 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,168.65 (close)

New York – Dow: DOWN 0.4 percent at 33,966.35 (close)

Euro/dollar: DOWN at $1.0614 from $1.0684 on Wednesday

Dollar/yen: UP at 136.76 yen from 135.45 yen

Pound/dollar: DOWN at $1.2343 from $1.2424

Euro/pound: UP at 86.02 pence from 85.96 pence

Brent North Sea crude: UP 0.4 percent at $83.06 per barrel

West Texas Intermediate: UP 0.4 percent at $77.55 per barrel

burs/rfj/bcp/raz

Asian and European equities fell Thursday after the Federal Reserve signalled US interest rates would go higher than expected and warned the world’s biggest economy would grow less than expected next year, fanning fears a recession is on the way.

Traders took their lead from Wall Street, where a more hawkish statement than expected dented hopes the central bank could soften its approach to fighting inflation.

Markets had rallied after data on Tuesday showed the consumer price index rose less than forecast in November, marking a fifth straight slowdown and the lowest level since December last year.

But the Fed appeared less inclined to accept that the recent figures were enough to indicate enough progress was being made.

While it lifted rates by the expected 50 basis points — down from the previous four 75-point hikes — its “dot plot” of forecasts suggested it saw them top out next year at 5.1 percent, higher than markets had predicted.

“Fifty basis points is still a historically large increase, and we still have some ways to go,” Fed boss Jerome Powell told reporters after the announcement.

He added that he “wouldn’t see us considering” any cuts until officials were happy that inflation was on track to its two percent target.

“It will take substantially more evidence to give confidence that inflation is on a sustained downward path,” he said.

The Fed also cut its expectations for growth next year as it faced headwinds from the tighter monetary policies, stirring fresh warnings of a recession, which have weighed on equities for much of the year.

But Powell said: “I don’t think anyone knows whether we’re going to have a recession or not, and if we do, whether it’s going to be a deep one or not.”

– ‘Worried about a recession’ –

After Wall Street’s retreat, Asia fell into the red, with Hong Kong, Shanghai, Bangkok, Mumbai, Tokyo, Sydney, Seoul, Taipei, Manila and Jakarta all down.

London, Paris and Frankfurt all opened on the back foot.

The dollar rose against most other currencies, even the euro and pound ahead of expected rate hikes by the European and UK central banks later Thursday.

“The Fed did not welcome the disinflation trends that have just started to emerge and focused on robust job gains and elevated inflation,” said OANDA’s Edward Moya.

“Any hopes of a soft landing disappeared as the Fed seems like they are committed to taking rates much higher.”

Despite the tougher talk from the Fed, Tomo Kinoshita at Invesco Asset Management said: “US shares have seen limited falls, indicating that financial markets are not wholeheartedly believing in that hawkishness, perhaps because some Fed policymakers have talked about the possibility of rate cuts already.”

But he added: “Long-term bond yields appeared to have peaked out, which is a sign investors are now worried about a recession.”

The likelihood of rates going even higher outweighed hopes about China’s emergence from nearly three years of strict zero-Covid containment measures that have crippled its economy.

While the reopening is expected to provide a much-needed boost to growth, there is an immediate worry about the impact of soaring infection numbers on the healthcare system and firms’ ability to function.

And in a sign of the effect of the anti-Covid strategy, data on Thursday showed retail sales fell more than expected in November, industrial output growth slowed and investment weakened.

And analysts warned there would not likely be any improvement this month.

Oil prices sank after a three-day rally on news that a section of the US Keystone pipeline had been repaired after suffering a leak earlier in the week. 

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: DOWN 0.4 percent at 28,051.70 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 19,368.59 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,168.65 (close)

London – FTSE 100: DOWN 0.5 percent at 7,457.73

Euro/dollar: DOWN at $1.0645 from $1.0684 on Wednesday

Dollar/yen: UP at 135.78 yen from 135.45 yen

Pound/dollar: DOWN at $1.2378 from $1.2424

Euro/pound: UP at 85.99 pence from 85.96 pence

West Texas Intermediate: DOWN 1.1 percent at $76.43 per barrel

Brent North Sea crude: DOWN 0.9 percent at $81.95 per barrel

New York – Dow: DOWN 0.4 percent at 33,966.35 (close)

Asian equities fell Thursday after the Federal Reserve signalled US interest rates would go higher than expected and warned the world’s biggest economy would grow less than expected next year, fanning fears a recession is on the way.

Traders took their lead from Wall Street, where a more hawkish statement than expected dented hopes the central bank could soften its approach to fighting inflation.

Markets had rallied after data on Tuesday showed the consumer price index rose less than forecast in November, marking a fifth straight slowdown and the lowest level since December last year.

But the Fed appeared less inclined to accept that the recent figures were enough to indicate enough progress was being made.

While it lifted rates by the expected 50 basis points — down from the previous four 75-point hikes — its “dot plot” of forecasts suggested it saw them top out next year at 5.1 percent, higher than markets had predicted.

“Fifty basis points is still a historically large increase, and we still have some ways to go,” Fed boss Jerome Powell told reporters after the announcement.

He added that he “wouldn’t see us considering” any cuts until officials were happy that inflation was on track to its two percent target.

“It will take substantially more evidence to give confidence that inflation is on a sustained downward path,” he said.

The Fed also cut its expectations for growth next year as it faced headwinds from the tighter monetary policies, stirring fresh warnings of a recession, which have weighed on equities for much of the year.

But Powell said: “I don’t think anyone knows whether we’re going to have a recession or not, and if we do, whether it’s going to be a deep one or not.”

– ‘Worried about a recession’ –

After Wall Street’s retreat, Asia fell into the red, with Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Taipei, Manila and Jakarta all down.

“The Fed did not welcome the disinflation trends that have just started to emerge and focused on robust job gains and elevated inflation,” said OANDA’s Edward Moya.

“Any hopes of a soft landing disappeared as the Fed seems like they are committed to taking rates much higher.”

Despite the tougher talk from the Fed, Tomo Kinoshita at Invesco Asset Management said: “US shares have seen limited falls, indicating that financial markets are not wholeheartedly believing in that hawkishness, perhaps because some Fed policymakers have talked about the possibility of rate cuts already.”

But he added: “Long-term bond yields appeared to have peaked out, which is a sign investors are now worried about a recession.”

The likelihood of rates going even higher outweighed hopes about China’s emergence from nearly three years of strict zero-Covid containment measures that have crippled its economy.

While the reopening is expected to provide a much-needed boost to growth, there is an immediate worry about the impact of soaring infection numbers on the healthcare system and firms’ ability to function.

And in a sign of the effect of the anti-Covid strategy, data on Thursday showed retail sales fell more than expected in November, industrial output growth slowed and investment weakened.

And analysts warned there would not likely be any improvement this month.

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: DOWN 0.3 percent at 28,081.55 (break)

Hong Kong – Hang Seng Index: DOWN 1.9 percent at 19,309.24

Shanghai – Composite: DOWN 0.3 percent at 3,166.04

Euro/dollar: DOWN at $1.0655 from $1.0684 on Wednesday

Dollar/yen: UP at 135.57 yen from 135.45 yen

Pound/dollar: DOWN at $1.2392 from $1.2424

Euro/pound: UP at 85.98 pence from 85.96 pence

West Texas Intermediate: DOWN 0.8 percent at $76.66 per barrel

Brent North Sea crude: DOWN 0.7 percent at $82.17 per barrel

New York – Dow: DOWN 0.4 percent at 33,966.35 (close)

London – FTSE 100: DOWN 0.1 percent at 7,495.93 (close)