Singapore, May 12 (BNA): Asian stocks fell to their lowest level in nearly two years, and the dollar rose to its highest levels in several years on Thursday, as data showed the high rate of inflation in the United States, which deepened investors’ fears about the economic losses caused for significant increases in interest rates. tame it.
US markets fell after the news, then closed sharply lower. S&P 500 futures gave up early gains to fall 0.2% in the Asian trading session. European futures were also lower, with EuroSTOXX 50 futures down 2% and FTSE futures down 1.6%, Reuters reported.
Bitcoin, which is leading the sell-off of risky assets as interest rates increase, is down 7% to $26,970. It was close to $40,000 a week ago which is 60% less than its peak six months ago.
The growth-sensitive Australian and New Zealand dollars fell about 0.8% to their lowest levels in nearly two years. The Chinese yuan fell to its lowest level in 19 months.
Core US consumer prices rose 8.3% in the 12 months to April, slower than the 8.5% pace in the previous month, but above market expectations of 8.1%. Traders said that underscores concern that interest rates will rise quickly in response.
“We are now embedded with at least two more (in the US) increases of 50 basis points on the agenda,” said Damien Rooney, director of institutional sales at Argonaut in Perth. “For the stock markets, this is really the end of the free money.” .
“I think we might have been delusional six months ago with US stocks rallying on the back of hopes and prayers and the madness of M shares, and suddenly we were back a little bit back to reality,” he said.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2% to a 22-month low. Japan’s Nikkei index fell 1.7%.
Treasuries have been flat in Asia, but the short-term selloff and the rally at the longer end have flattened the yield curve as investors brace for near-term rallies to hurt long-term growth.
The benchmark 10-year Treasury yield fell six basis points overnight and fell another 2.6 basis points in Tokyo trading to 2.8967%. The gap between 2-year and 10-year bond yields narrowed by 3.5 basis points.
“There needs to be a tipping point in the extent to which the Fed can be pressured before the odds point clearly towards a hard landing,” said US interest rate analyst at NatWest Markets Jan Nefrozi.
Interest rate expectations are driving up the US dollar and causing the biggest losses in riskier assets that have jumped in two years of stimulus and low-interest lending.
The Nasdaq is down about 8% in May so far and more than 25% this year. Hong Kong’s Hang Seng Tech is down 1.5% on Thursday and has fallen more than 30% this year.
Crypto markets are also undergoing a meltdown, with the collapse of the so-called stablecoin TerraUSD highlighting the turmoil as well as the sell-off of Bitcoin and the next largest cryptocurrency, Ether.
A weak growth picture outside the United States is also undermining investor confidence, as the war in Ukraine threatens an energy crisis in Europe and prolongs COVID-19 lockdowns in China, throwing yet another emboldening into supply chain chaos.
Nomura estimated this week that 41 Chinese cities are in full or partial lockdown, making up 30% of the country’s gross domestic product.
Real estate developer Sunac China said it has missed bond interest payments and will lose more as China’s real estate sector remains in the grip of the credit crunch.
The yuan fell to a 19-month low of 6.7631 and has fallen nearly 6% in less than a month.
The Australian dollar fell 0.8 percent to a two-year low of $0.6879. The kiwi fell by a similar margin to $0.6240, although the euro and yen held steady to keep the dollar index shy of a two-decade high.
The British pound was at a two-year low of $1.2204.
In commodities trading, oil pulled back slightly from Wednesday’s rally as growth concerns eased fears of disruption to gas supplies in Europe.
Brent crude futures fell 1.3 percent to $106.90 a barrel.
Data on UK activity and growth is due later today.
MI