Asian equities dipped sharply on Monday as investors weigh worsening COVID-19 situation in China and the potential for more aggressive interest rate increase tolling on economic growth.
Shares in Mainland China, South Korea, Hong Kong and Japan trading with sharp volatility. The MSCI Asian Index ex Japan dipped above 1.60%.
Treasuries retreated while the dollar extended gains.
The Federal Reserve Chair Jerome Powell endorsed a 50 basis point hike next and at least one more such move.
“There has been little to avert the investor pessimism as inflation and interest rate expectations start to bite,” Geir Lode, head of global equities at Federated Hermes Ltd., said in a note.
“In particular due to the uncertainty of the macro environment, expectations are low with regard to forward estimates and guidance, building on lowered expectations from the previous quarter.”
Investors are keeping a close watch on any policy measures from China as assets there are under pressure from the nation’s steadfast adherence to its Covid-zero policy.
Crude oil dipped on Chinese demand outlook with the WTI trading around $99 a barrel and the Brent trading round $103 a barrel.