Asian Shares Fall as Traders Further Digest Economic Data

Stocks in Asia and the Pacific fell on Wednesday, tracking the loss seen in the U.S. Wall Street overnight, as investors weighed in the possibility of rising interest rates and digested major economic data from across the region.

At 9.27 A.M. (Thai time), Japan’s Nikkei 225 was 1.40% lower as the nation’s producer price index rose 1.6% on an annualized basis. The Kospi in South Korea dropped 1.52%. 

The S&P/ASX 200 in Australia was 0.29% lower.

Later today, Hong Kong’s financial secretary Paul Chan will deliver the budget, which included GDP projections for 2022. Overall, the Hang Seng index fell by 0.84%.

In mainland China, the Shanghai Composite dropped 0.37%.

The Dow Jones Industrial Average lost 2.06% and the S&P 500 shed 2% overnight on Wall Street, their worst slump since December 15. The Nasdaq Composite, which is heavily weighted by technology companies, dropped by 2.50%.

The action in the United States signaled a shift in public view of interest rates. Forecasts from the financial markets indicate that the federal funds rate will increase to roughly 5.3% in June. This comes after a week of heightened comment from central bank officials, and compares well to the previous peak of 4.9%, which occurred just three weeks earlier.

LPL Financial’s chief economist, Jeffrey Roach, has speculated that the Federal Reserve may continue its rate-hiking campaign into the summer due to the tight labor market and strong consumer demand. Before markets and central bankers can agree on the expected direction for interest rates, investors should prepare for volatility.