Asian markets skid on jitters over future Fed action

Asian markets skid on jitters over future Fed action

SeattlePI.com

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BANGKOK (AP) — Asian markets skidded on Monday, with Japan's Nikkei 225 index down 3.4%, after a sell-off Friday on Wall Street gave the S&P 500 its worst weekly loss since February.

Investors are still recalibrating their moves after the Federal Reserve’s signal last week that it may raise current ultra-low rates sooner than had been expected. That gave the Dow Jones Industrial Average its worst weekly loss since last October.

Part of the Fed’s mission is to keep prices under control. The fear is that burgeoning inflation may prompt central banks to dial back the lavish support that has lifted markets to new highs after they plunged at the onset of the coronavirus pandemic last year.

Until its latest policy meeting, last week, the Fed had indicated it viewed recent price hikes as transient and would let the recovering economy run hot. Now it's forecasting raising interest rates twice in 2023.

“The shift to an earlier timeline for a rate hike, accompanied with an upward revision in core inflation forecast to 3%, seems to suggest that the Fed may still be concerned about inflationary pressures to some extent as opposed to its previous stance of letting inflation run wild," Yeap Jun Rong of IG said in a commentary.

South Korea reported its exports rose nearly 30% in the first 20 days of June in the latest indication that the region's recovery is steaming ahead despite lingering outbreaks of infections in many places.

The Nikkei gave up 983 points to 27,980.87 and the Kospi in Seoul lost 1.3% to 3,227.92. Hong Kong's Hang Seng index also lost 1.3%, to 28,427.13. Australia's S&P/ASX 200 declined 1.7% to 7,243.50 and the Shanghai Composite index declined 0.3%, to 3,514.61.

On Friday, the S&P 500 fell 1.3% to 4,166.45 in a broad retreat, while the Dow Jones...

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