MARKETS: Aggressive Fed weighs on Asia – Japan wants to slow yen depreciation

Investors have been appalled by statements by Fed chief executive Jerome Powell stressing the sharp tightening of monetary policy. Powell anticipates the May meeting, saying “maybe we should move a little faster.”

A quick move would mean one-time increases of 0.5 percentage points in the key interest rate, and estimates of up to 0.75 percentage points have also fluctuated.

In addition, investors have been concerned about the corona situation in China, which has led to strong restrictive measures. This will further increase inflationary pressures in the global economy.

In the United States, the stock market ended a clear decline on Thursday. The general index S&P 500 fell 1.5 percent. Powell’s speeches raised expectations of an acceleration in monetary tightening and government bond yields rose sharply again after Wednesday’s downturn. The 10-year rate on the U.S. government bond is hovering three percent, the highest quotation this morning at 2.96 percent.

Rising interest rates have continued to weigh on stocks in the Asian stock market this morning.

The MSCI Asia Pacific Index was down 1.6 percent in its early hours from its lowest level in a month. Rising interest rates have weighed on growth stock valuations in particular. For example, the share price of chip maker Tokyo Electron was down 3.3 percent.

In addition, the shares of companies in the metal industry have fallen sharply and the decline has been extensive across various industries.

Japan’s general index Topix was down 1.3 percent and the flagship index Nikkei was down 1.8 percent. In China, the CSI 300 index, which had fallen for four consecutive days, was moving at the level of the previous day’s decision.

Foreign exchange markets have talked about the data, according to the Japanese Minister of Economy Shunichi Suzuki and the United States Secretary of the Treasury Janet Yellen would have discussed coordinated purchases in the foreign exchange market.

The news was reported by TBS, which quoted anonymous Japanese government sources. Suzuki has confirmed to news agencies that discussions have taken place, but he did not confirm information about the joint intervention.

“The government has stated in the past that sudden movements in the foreign exchange market are not desirable. Now we have seen sudden changes. We need to monitor the situation with caution and readiness, ”Suzuki told Bloomberg.

The Bank of Japan has had a different monetary policy from other central banks. The central bank has defended the low interest rate on the 10-year government bond through securities purchases. The widening of the interest rate differential has sharply weakened the yen against the dollar.

According to market comments, Suzuki would like to slow down the yen.

In the morning market, the yen has strengthened 0.2 percent against the dollar. The euro has strengthened against the dollar by 0.1 percent.

The euro earned $ 1.8045, yen 138.98 yen, £ 0.83240 and SEK 10.302 at 8.45. The dollar got 128.15 yen and the pound got $ 1.3028.

By Editor

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