Most Asian stocks weaken as red-hot US inflation fuels rate hike fears
Several emerging Asian equities slid on Friday after red-hot US inflation data cemented expectations of more aggressive rate hikes globally, while talks between Russia and Ukraine failed to make much headway in de-escalating tensions.
Share markets in Malaysia (KLSE) plunged more than 1%, while those in the Philippines (PSI) and South Korea (KS11) also lost further ground.
Thai stocks (SETI), however, avoided a pummelling, with analysts contending that its central bank may not hike rates any time soon despite a recent spike in inflation, due to risks to its tourism sector and growth.
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Data on Thursday showed US inflation witnessed its largest increase in 40 years in February, spurring bets that the Federal Reserve would look to aggressively hike interest rates and regional central banks may follow suit to tackle price pressures.
A hawkish policy view was further bolstered by the European Central Bank, which said on Thursday it would stop pumping money into financial markets this summer, paving the way for an increase in interest rates.
Geopolitics also did little to brighten the mood, as the lack of a fruitful outcome in diplomatic talks between Ukraine and Russia to resolve their conflict, which Russia calls a "special operation", hurt sentiment.
"The peace talk has not yielded much results, US CPI shows no signs of backing down and we are heading into the weekend break as the Russian attacks continue," said Yeap Jun Rong, a market strategist at IG.
"The ever-changing dynamics and largely unpredictable nature of the conflict may prompt some market participants to refrain from buying over the weekend."
Most regional currencies were sold off, with the Korean won (KRW=KFTC) and Thai baht (THB) leading falls, even as oil prices eased for a second straight session. Analysts have warned this week that market volatility may persist in the short-term.
A poll on Thursday showed investors had raised their bearish views on most Asian currencies as Russia's invasion of Ukraine supercharged commodity prices and stoked inflation concerns.
Stocks in China (SSEC), which sank over 2% earlier on risks of some firms being de-listed from the United States, reversed course to trade 0.4% higher after its premier pledged more policy support and backed the country to hit its economic growth target this year.
