Asian Stocks Broadly Decline as Major Central Banks Signal More Rate Hikes

Asian stocks broadly declined on Thursday as investors continued to digest remarks from Fed Chair Jerome Powell on tightening monetary policy and after global central banks confirmed their commitment in fighting inflation by warning that rates may need to rise further.

As of 9.38 A.M. Bangkok time, the Nikkei 225 rose 0.46% as official data revealed that retail sales in Japan increased 5.7% year over year in May.

The Kospi index in South Korea and the S&P/ASX 200 index in Australia were relatively unchanged from the previous session. 

According to Reuters, Japan and South Korea are planning to hold their first bilateral finance meeting in seven years to negotiate a currency swap agreement.

Hong Kong’s Hang Seng index fell 0.98%. Mainland China’s Shanghai Composite lost 0.11%.

Overnight in the US, key indices hovered just above the zero line.

Powell warned at a European Central Bank forum on Wednesday that interest rate hikes are likely in the future as the Federal Reserve continues its fight against inflation. He also anticipated that the inflation rate would not fall to the target 2% until the year 2025.

He is scheduled to give a speech at a conference in Madrid later today.

On the other hand, Christine Lagarde, the president of the European Central Bank, bolstered prospects for a rate hike in the Eurozone in July, making it the ninth increase in a row. The market expects the ECB to raise interest rates two more times this year.