Indian Morning Briefing: Asian Markets Decline on Fed Powell’s Hawkish Comments

DJIA         32283.40  -1008.38  -3.03% 
Nasdaq       12141.71   -497.56  -3.94% 
S&P 500       4057.66   -141.46  -3.37% 
FTSE 100      7427.31    -52.43  -0.70% 
Nikkei Stock 27829.13   -812.25  -2.84% 
Hang Seng    19976.10   -193.94  -0.96% 
Kospi         2426.11    -54.92  -2.21% 
SGX Nifty*   17280.00   -379     -2.15% 
*Sept contract 
USD/JPY 138.50-51  +0.68% 
Range   138.66   137.57 
EUR/USD 0.9927-30  -0.37% 
Range   0.9982   0.9919 
CBOT Wheat Sept $7.846 per bushel 
Spot Gold   $1,733.55/oz  -0.2% 
Nymex Crude (NY) $92.87  $0.35 

U.S. stocks are poised to open lower on Monday as investors look toward Friday’s report on August jobs.

On Sunday night, Dow Jones Industrial Average futures lost 205 points, or 0.6%, while the S&P 500 futures lost 0.8%, and Nasdaq Composite futures lost 1%.

The Dow Jones Industrial Average sank more than 1,000 points Friday after Federal Reserve Chairman Jerome Powell vowed to keep pressing the fight against inflation, even at the expense of economic growth.

The Dow shed 1,008.38 points, or 3%, to 32283.40, the blue-chip index’s biggest one-day drop since May.

The S&P 500 fell 141.46 points, or 3.4%, to 4057.66. The tech-focused Nasdaq Composite slid 497.56 points, or 3.9%, to 12141.71.

All three indexes declined more than 4% for the week, following an up-and-down ride in which investors weighed worries over Fed tightening against economic data that pointed to underlying strength in the U.S. economy.


Japan’s Nikkei Stock Average was 2.6% lower at 27887.74 in morning trade, weighed down by real-estate and insurance stocks. Sentiment was being soured by lingering economic growth concerns after the U.S. Fed’s chair said that the central bank must continue raising interest rates to curb high inflation. Real-estate stocks were lower, with Nomura Real Estate declining 0.6%, Tokyu Fudosan falling 1.1% and Hulic down by 1.2%. Among insurance stocks, Tokio Marine fell 2.1% and Sompo was down 1.3%. Mitsui Chemicals lost 1.6% after saying Friday that it will sell its unit Mitsui Phenols Singapore to chemical company Ineos Holdings for $330.0 million. Suzuki Motor dropped 2.0% despite news that it will set up a new research company in India to strengthen its capabilities.

South Korea’s benchmark Kospi fell 2.3% to 2423.85 in early trade after Fed Chairman Powell’s hawkish comments at the Jackson Hole meeting. Tech and airline stocks were leading the broad selloff. USD/KRW gained 0.9% to 1,343.60 on the greenback’s strength after Mr. Powell said the central bank must keep raising rates and hold them at a higher level until inflation is under control. Index heavyweight Samsung Electronics lost 2.0%. Memory-chip maker SK Hynix dropped 3.0%. Budget airline Jeju Air slumped 10% following its rights issue plan announced late Friday. Internet groups Naver and Kakao Corp. declined 3.5% and 4.2%, respectively.

Hong Kong’s Hang Seng Index fell 1.0% to 19964.39, tracking Wall Street’s selloff last Friday, which was driven by Fed Chair Powell’s remarks at the Jackson Hole symposium. Powell’s speech was well noted in just how brief it was and designed to remove any doubt that this FOMC committee will be remembered as being tough in its battle against inflation, said Chris Weston, head of research at Pepperstone, in an email. “We spill into the new week with a downside bias,” Weston added. Among the HSI’s worst performers, China Hongqiao Group sheds 5.3%, Longfor Group drops 5.2% and Lenovo Group was down 3.5%. The Hang Seng Tech Index declined 1.5% to 4237.22.

Chinese shares were lower in early trade. The benchmark Shanghai Composite Index fell 1.1% to 3201.99, the Shenzhen Composite slipped 1.3% to 2118.44 and the ChiNext Price Index dropped 1.3% to 2605.35. Data over the weekend showed China’s January-July industrial profits fell 1.1% from a year earlier, offsetting a 1% increase reported in the first half of the year. “The data reinforces a lower-for-longer situation for China’s economy and while further policy support has been surfacing in recent weeks, a consistent recovery in economic readings are much needed to spur market confidence of policy success for a more sustained market recovery,” IG market strategist Yeap Jun Rong said in a note.


Asia-Pacific currencies such as the Korean won and the Japanese yen weakened against the U.S. dollar in early Asian trade Monday on fears of aggressive monetary-policy tightening by the Federal Reserve.

Fed Chairman Jerome Powell sounded hawkish at the Jackson Hole symposium last Friday and signaled that interest rates will be higher for longer, said MUFG Bank Ltd.’s analysts in a research report, noting Mr. Powell’s remark: “We will keep at it until we are confident the job is done.”

Asia ex-Japan currencies are thus likely to be under pressure on Monday, given the U.S. dollar’s strength following Mr. Powell’s remarks, MUFG Bank’s analysts added.

The dollar climbed as much as 1.0% to 1,349.60 won, the highest intraday level since April 2009, according to FactSet. The greenback was last 0.9% higher at KRW1,348.11. Also, the dollar was up 0.6% at Y138.53 and gained 0.3% against the Singapore dollar to S$1.3988 while the Australian dollar slipped 0.3% to US$0.6863.


Gold prices were lower in early Asian trade, as investors continue to digest U.S. Fed Chair Powell’s comments last week, which signaled higher interest rates to curb inflation. Near-term investor appetite for the precious metal may be pressured in the near term, as Powell’s hawkish speech helped push the dollar higher. The currency has an inverse relationship with gold. Spot gold was 0.2% lower at $1,733.55/oz.


Oil prices were mixed in early Asian trade amid signs that the U.S. Fed may be planning more rates hikes, which in turn raises the potential for a slowdown in energy demand. Investors would likely keep a close eye on the growing political pressure in Europe, amid expectations that the Czech Republic would call for an extraordinary meeting of ministers to combat rising energy prices, Oanda’s senior market analyst Edward Moya said in a note. “The pressure is on for decisive action and that could lead to emergency measures that might cap the move higher with energy prices,” he added. Front-month WTI crude-oil futures rose 0.2% to $93.25/bbl. Brent slipped 0.1% to $100.93/bbl.

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(END) Dow Jones Newswires

August 28, 2022 23:15 ET (03:15 GMT)

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