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Asian shares stumble on growth worries as central banks tighten -Breaking


© Reuters. In the midst of the COVID-19 outbreak, a man walks by an electronic board with graphs. (top) Tokyo brokerage, Japan. March 10, 2022. REUTERS/Kim Kyung-Hoon

By Andrew Galbraith

SHANGHAI (Reuters) – Asian share markets slipped on Thursday after minutes from the Federal Reserve’s early May meeting showed a majority backing half-percentage-point rate hikes in June and July, and as persistent concerns over global growth sapped confidence.

The minutes highlighted the confidence of policymakers in America’s strength, which helped lift Wall Street’s mood overnight. However, the sentiment in equity markets is still fragile following weeks of volatility and as global central banks keep tightening their belts.

While I don’t believe the world economy is in danger of slowing, I do think it is. The potential for great investments at the moment is predominately on short sides,” Barbara Ann Bernard (CIO) of Wincrest Capital, a hedge fund that specializes in long/short equity strategies, said to the Reuters Global Markets Forum.

South Korea’s central banking raised its interest rate for the second straight meeting on Thursday as it struggles with 13-year-high consumer inflation.

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All participants at the Fed’s May 3-4 meeting supported a half-percentage-point rate increase – the first of that size in more than 20 years – and “most participants” judged that further hikes of that magnitude would “likely be appropriate” at the Fed’s policy meetings in June and July, according to minutes from the meeting

Minutes reflected consensus among policymakers about the strength and vulnerability of the U.S. Economy, tight labour market, high inflation and global supply issues. The continued lockdowns of coronavirus in China and the Ukraine war skewing inflationary risk “to the upside”.

After trading higher in the morning, MSCI’s Asia-Pacific share index outside Japan fell 0.54% due to investor concerns.

Chinese blue-chips dropped 1.11% despite another decrease in daily COVID-19 case numbers in China. Recent economic support measures have been threatened by lockdowns that are being implemented to curb the spread of this virus.

China is determined to attain reasonable economic growth during the second quarter, and reduce unemployment. Premier Li Keqiang was quoted by Xinhua as having said Wednesday.

Australian shares fell 0.47%, while the stock index lost 0.13% of its gains.

After the announcement of central bank rates, Seoul’s Kospi rose 0.25% to meet expectations.

Contrast the fall in Asia with the more positive mood at Wall Street. The rose 0.6% and gained 0.95%, respectively, while the increased 1.51%. [.N]

Rick Meckler from Cherry Lane Investments in New Vernon said, “I think that market is looking at stabilization here and looking forward to where the Fed can issue some other guidance and say the economic slowdown has slowed sufficiently that they don’t feel the need to increase rates.”

The dollar traded little in Asia after rising Wednesday, following the Fed minutes. At 127.27 it was unchanged, with the dollar only marginally changing against the yen. However, the euro gained 0.11% and 1.0692%.

Only 0.03% was lower in the, which compares the greenback to a basket with major peers at 102.02.

U.S. Treasury yields moved also in a muted manner. A close of 2.747% saw the 10-year yield rise to 2.7577%. Meanwhile, policy-sensitive 2-year yields remained flat at 2.506%.

After this week’s cautious rally, crude oil was stable at $114.03/barrel. It rose 0.13% to $110.47.

It was 0.2% lower at $1,849.19 an ounce. [GOL/]