US Stocks Showed the Worst Fall in Nearly Eight Months, USD Weak

Market Reviews

Asia-Pacific stock indexes are trading with a significant decline on Thursday after a sharp sell-off on Wall Street amid worries about rising interest rates, as well as weakness of technology company stocks due to concerns about rising tensions between the US and China. Nikkei lost 970 pts or 4.13%. Singapore Strait Times fell by 89.59 pts or 2.86%. Hong Kong HSI declined by 1010 pts or 3.86%. China Shanghai SSE dropped by 4.61% to 2600.

Concerns about the rapid growth of rates led to the collapse of the Dow Jones Industrial Average by more than 800 points on Wednesday. At the same time, the S&P 500 recorded its worst day since February and secured its first five-day losing streak since 2016. Overnight, DOW dropped 831.83 pts or 3.15% to 25598.74. S&P 500 lost 3.29% and NASDAQ fell 4.08%.

US dollar is trading as the weakest one, despite rising bond yields. Treasury yields were strong with 10 year yield up 0.017 at 3.225. The biggest test today is US consumer inflation. Both headline and core CPI are expected to accelerate in September. Headline CPI is expected to rise to 2.8% yoy in September and core CPI to rise to 2.3% yoy. Any upside surprise would further affirm Fed’s rate path and could prompt deeper selloff in stocks.

US President Donald Trump launched another scapegoating attack on Fed and said, referring to the over 800 pts fall in DOW, “I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy.” He added “actually, it’s a correction that we’ve been waiting for a long time, but I really disagree with what the Fed is doing.”

Japanese yen also pared back some gains and is trading as the second weakest. On the other hand, New Zealand dollar is the strongest one, followed by Swiss franc. Euro is also firm.

UK RICS house price balance fell to -2 in September. Japan domestic corporate goods price index rose 3.0% yoy in September. Australia consumer inflation expectation was unchanged at 4.0% in October.