Asian markets plunged yesterday following the worst session on Wall Street for months, after US President Donald Trump said the US Federal Reserve had “gone crazy” with plans for higher interest rates.
Shanghai plummeted nearly 5 percent, while Tokyo and Hong Kong both shed about 4 percent, as investors fretted about surging interest rates and the ongoing US-China trade war.
“All bets are off,” said Stephen Innes, head of trading for Asia-Pacific at Oanda Corp, adding that markets were “fraught with peril.”
“The US equity bloodbath is taking no prisoners in Asia as a sea of red greets investors at the open, as equity deleveraging and liquidation intensifies,” he said.
Taipei and the Shenzhen Composite Index — which tracks stocks on China’s second exchange — were both down about 6 percent.
Seoul fell more than 4 percent and Sydney and Singapore both dropped more than 2.5 percent.
The steep drop in Asia followed Wednesday’s plunge in New York, with the Dow Jones dropping nearly 830 points — the biggest fall since February — after Trump’s latest criticism of the Fed.
“I think the Fed is making a mistake,” Trump told reporters as he arrived for a campaign rally ahead of the US mid-term elections.
Trump has often touted Wall Street records as proof of the success of his economic program, but he downplayed the first major drop in months, saying it was a “correction that we’ve been waiting for.”
IMF managing director Christine Lagarde hit back yesterday, defending rate hikes that she said were justified by fundamentals.
“It is clearly a necessary development for those economies that are showing much improved growth, inflation that is picking up ... unemployment that is extremely low,” she told reporters in Nusa Dua, Indonesia, where the IMF is meeting. “It’s inevitable that central banks make the decisions that they make.”
Many of the biggest US names fell hard in Wednesday’s session, with Apple Inc, Boeing Co and Facebook Inc all slumping more than 4 percent and Amazon.com Inc, Nike Inc and Microsoft Corp shedding more than 5 percent.
Stocks have been under pressure since the yield on 10-year Treasury bonds jumped above 3 percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Fed rate hikes.
“It’s just a beginning,” CEB International Investment Corp head of research Banny Lam (林樵基) told Bloomberg. “The US tech bubble may take a while to burst and we are facing many external uncertainties — trade wars, risks in emerging markets currencies and oil price.”
In Hong Kong — where the benchmark Hang Seng index is already down 15 percent this year — some of the biggest listed companies were also under pressure.
Chinese Internet group Tencent Holdings Ltd (騰訊) fell for the tenth consecutive day, dropping more than 7 percent through morning trade.
The turmoil on stock markets came after the IMF on Monday slashed its global growth forecast on worries over the US-China trade war and weakness in emerging markets.
In other markets, oil extended declines in Asian trade yesterday following a sharp build in US crude inventories and fears that Hurricane Michael would hurt demand.
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