HONG KONG – Asian equities mostly sank today and oil prices tumbled following a rout on Wall Street as anxieties were fanned over rising US interest rates, surging inflation and the impact of China’s prolonged Covid-19 lockdowns.
The global stock markets have been on a tempestuous ride this year, with Wall Street suffering another rout today as tech-rich Nasdaq slumped more than 4% while the S&P 500 ended below 4,000 points for the first time since March 2021.
Steep declines in China’s April exports – due to Beijing’s staunch adherence to a zero-Covid-19 policy that has shunted millions indoors – and volatility in crude partly due to Russia’s war in Ukraine have also hastened the bloodletting.
“We don’t normally pay too much attention to short-term market movements, but there’s some concern brewing in markets that we might be on the cusp of a significant event,” said Peter Esho, co-founder at Wealthi, an investment property platform.
“Ultimately, our view is that each and every time the US Federal Reserve seeks to raise rates, the economy and growth will break and send us back to square one.”
US stock markets dived late last week after the Federal Reserve raised interest rates by 0.5% and flagged more aggressive hikes ahead to tackle decades-high inflation.
Further stoking global inflationary pressures were lockdowns across dozens of Chinese cities – from the manufacturing hubs of Shenzhen and Shanghai to the breadbasket of Jilin – which has wreaked havoc on supply chains over recent months.
The equities plunge persisted yesterday on Wall Street, while Frankfurt, London and Paris all fell more than 2%.
Tokyo today opened down 0.7%, with Japanese traders fretting over US monetary tightening. Seoul, Wellington, Singapore, and even Jakarta – the lone bright spot over the past couple days – also slumped.
“The market is becoming increasingly non-investable,” said Stephen Innes of SPI Asset Management.
“We could be nearing the capitulatory ‘sell-everything mode’ as it is virtually impossible to construct a bullish argument for the broader market.”
Bitcoin woes
In the realm of digital currency, bitcoin also slumped as low as US$29,764 (RM130,247) – more than half its value since a November surge saw the token hit a record of nearly US$69,000.
Such a drastic drop in value has not been seen since July 2021.
Analysts say traditional investors tend to view it as a riskier asset and have been offloading bitcoin and other digital tokens in response to the growing fears of market volatility.
Crude – once considered a somewhat safe haven – also took a beating yesterday when it plunged more than 5%, with the European benchmark Brent North Sea crude dropping to US$106.77 per barrel, while the main US contract WTI was US$103.87.
By today, the drop-off appeared to ease up – though it was still lower, with Brent trading at around US$104.70 and WTI at US$101.91.
“There is nowhere to hide right now. If you are looking for green on the screen, it is very minimal, especially in the tech sector,” Victoria Greene, chief investment officer at G Squared Private Wealth, told Bloomberg. – AFP, May 10, 2022
