HONG KONG, KOMPAS.com — Asian equities tumbled Friday, May 6 following a rout on Wall Street fueled by worries over rising interest rates and surging inflation, while the pound extended losses the day after taking a beating on fears of a UK recession.
Global markets have been battered this year by a series of crises including surging inflation, rising interest rates, China’s economic slowdown, and the war in Ukraine.
There was some relief after the Federal Reserve on Wednesday, May 4 lifted borrowing costs 50 basis points -- the most since 2000 -- but suggested a feared 75-point lift was not on the agenda for now.
However, US traders ran for the hills Thursday, May 5 as they contemplated a period of fierce monetary tightening by the US central bank as it struggles to contain inflation running at a more than 40-year high.
The Nasdaq -- dominated by tech firms particularly sensitive to higher rates -- lost 5 percent, while the Dow and S&P 500 fell more than 3 percent.
“Valuations become even more sensitive, very sensitive when rates are going up and that is what we are experiencing,” Kristina Hooper, at Invesco, told Bloomberg Television.
“It’s just getting exacerbated as we get into the thick of monetary-policy tightening in the US.”
That sell-off filtered through to Asia, where Hong Kong tanked more than 3 percent as tech firms took a hit. Meanwhile, the European Chamber of Commerce in the city called the finance hub’s stringent pandemic travel restrictions and frequent flight bans a “nightmare” for businesses.