By Harish Sridharan
Feb 9 (Reuters) – Stocks and currencies in Asia’s emerging markets were largely weaker on Thursday, as risk sentiment was dampened by Federal Reserve speakers echoing Chair Jerome Powell’s rhetoric on higher interest rates for longer.
Shares in Manila .PSI, Singapore .STI and Kuala Lumpur .KLSE were down between 0.3% and 0.9%. Equities in Taipei .TWII and Mumbai .NSEI also fell.
Cautious sentiment prevailed overnight on Wall Street after Federal Reserve officials said more interest rate rises were on the cards.
Fed Governor Christopher Waller said last night that the U.S. central bank’s battle to reach its 2% inflation target “might be a long fight“.
New York Fed President John Williams said moving to a federal funds rate of between 5.00% and 5.25% “seems a very reasonable view of what we’ll need to do this year in order to get the supply and demand imbalances down.”
Asian shares had begun 2023 on firmer footing, thanks to China dismantling its zero-COVID curbs in late 2022. Also helping lift sentiment were investors betting the Fed was reaching the end of its cycle of raising interest rates.
Shares have, however, lost steam in the past couple of weeks on lingering inflationary pressures and worries surrounding higher rates.
“The cautious sentiment that we see in the Asian markets reflects continued concerns about the Fed,” said Irene Cheung, senior Asia strategist at ANZ in Singapore.
“Most of the moves are quite small right now and I expect that to continue in the run up to (U.S.) CPI data next Tuesday,” she added.
Currencies in the region also edged lower.
Thailand’s baht THB=TH depreciated 0.3%, with higher oil prices also weighing on the currency, the best performing in Asia this year.
The ringgit MYR= was down 0.2%. Malaysia is scheduled to publish gross domestic product (GDP) data for the fourth quarter on Friday.
A survey conducted by Reuters found that Malaysia’s economic growth had likely slowed by more than half to 6.6% in the fourth quarter of 2022 due to tepid consumption and softer global demand.
Indonesia’s rupiah IDR= fell 0.2%, while the South Korean won KRW=KFTC reached its weakest level since January 6.
The Chinese yuan CNY=CFXS ticked up 0.1%, supported by signs of tightness in money markets and expectations that data would show robust credit growth. CNY/
India’s Nifty 50 index fell 0.4%, while the Indian rupee INR=IN weakened 0.2% a day after the Reserve Bank of India delivered an expected 25 basis points rate hike and surprised markets by leaving the door open to more tightening. Core inflation remained high, it said.
HIGHLIGHTS
** Yield on Indonesia’s 10-year note ID10YT=RR falls 7 bps to 6.636%
** Malaysia Q4 GDP growth expected to have slowed to 6.6% – Reuters poll
** Biden, asked if relations with China have taken a big hit, says no; China shares up 0.6%
Asia stock indexes and currencies at 0440 GMT
COUNTRY
FX RIC
FX DAILY %
FX YTD %
INDEX
STOCKS DAILY %
STOCKS YTD %
Japan
JPY=
-0.05
-0.25
.N225
-0.31
5.47
China
CNY=CFXS
+0.09
+1.65
.SSEC
0.62
5.27
India
INR=IN
-0.16
+0.11
.NSEI
-0.23
-1.52
Indonesia
IDR=
-0.17
+2.94
.JKSE
0.13
1.44
Malaysia
MYR=
-0.19
+2.21
.KLSE
-0.27
-1.92
Philippines
PHP=
-0.02
+1.61
.PSI
-0.62
4.78
S.Korea
KRW=KFTC
-0.28
+0.07
.KS11
-0.15
10.89
Singapore
SGD=
+0.04
+1.09
.STI
-0.88
3.30
Taiwan
TWD=TP
-0.01
+2.15
.TWII
-0.13
10.33
Thailand
THB=TH
-0.30
+3.04
.SETI
-0.43
-0.33
(Reporting by Harish Sridharan in Bengaluru; Editing by Bradley Perrett)
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