SINGAPORE (BLOOMBERG) – Stocks fell in Asia on Friday (June 17) amid fears of an economic slowdown as monetary policy tightens to tackle high inflation.
Singapore stocks fell early Friday morning, dragging losses across global and regional markets.
The Straits Times index fell about 0.5% to around 3,083 points at midday.
Japanese stocks fell around 2%, but China and Hong Kong managed to buck the regional trend with consistent performance. U.S. equity futures made modest gains after the S&P 500 closed at its lowest level since December 2020.
Treasuries pared the declines, taking the 10-year yield to around 3.22%. The US dollar rebounded from its worst two-day decline since 2020.
Markets end a week rocked by interest rate hikes, including the Federal Reserve’s biggest move since 1994, a shock hike by the Swiss National Bank that boosted the franc and the latest increase in borrowing costs British.
Japan, on the other hand, stuck to monetary easing on Friday. But the Bank of Japan made a rare reference to the need to pay close attention to currencies. The yen – the weakest performer in the Group of 10 currency basket this year – fell about 1% against the dollar.
Doubts about the sustainability of the central bank’s stance had sparked speculation about a potential policy surprise. The yield on Japanese 10-year bonds hit 0.265% earlier on Friday, the highest since 2016, defying a curve-control policy that aims for a ceiling of 0.25%.
Rate hikes drain liquidity, causing losses across a range of assets. Global stocks face one of their worst weeks since the pandemic-induced turmoil of 2020. Investors focus on ‘all the half-empty stuff and how narrower the Fed’s lane is’ to try to achieve a soft landing, Ms. Carol Schleif, deputy chief investment officer at BMO Family Office, said on Bloomberg TV.
Spreads on junk-listed US corporate bonds have reached levels not seen in 2020, a sign that investors expect economic woes to undermine corporate performance.
Bitcoin fell towards the US$20,000 level.
Oil faltered as traders weighed the prospect of slowing economic growth amid tight supplies, while gold pared its rally.