Asian currencies and equities fell on Wednesday as risk sentiment remained tepid after softening US data and renewed banking sector concerns fanned fears of a recession.
Malaysia’s ringgit weakened 0.4% to its lowest level in over a month, and Indonesia’s rupiah also declined 0.4%.
“Slump in US consumer confidence, Richmond fed manufacturing index and US equities overnight added to US recession worries and undermined risk sentiments,” analysts at OCBC wrote.
US markets fell sharply overnight and MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.4% in early trade, after US consumer confidence dropped to a nine-month low in April, further heightening the risk that the economy could fall into recession this year.
Meanwhile, reports of First Republic Bank considering asset sales after disclosing a $100 billion plunge in deposits stoked fresh banking sectors worries and further hurt investor sentiment.
Markets now await US March-quarter GDP and monthly personal consumption price index data due in the later in the week to gauge the direction of the Federal Reserve’s policy.
Stocks in Kuala Lumpur and Singapore fell 0.7% and 0.2%, respectively, while those in Jakarta added 0.5%. Markets in Indonesia resumed trading on Wednesday after being closed since April 19 for public holidays.
In the Philippines, the central bank governor said Bangko Sentral ng Pilipinas (BSP) aims to maintain its interest rate differential with the Fed and considers it “dangerous” to cut interest rates faster than a policy easing by Fed.
The peso weakened 0.1%, and equities fell 0.8%.
Most Asian currencies inch lower on odds of Fed rate hike
In South Korea, consumers’ inflation expectations fell in April to the lowest in nearly a year, a central bank survey showed on Wednesday, while overall consumer sentiment hit a 10-month high.
The won, Asia’s worst performing currency so far this year, weakened 0.4%.
Bucking the trend, Thailand’s baht firmed 0.4%. The country’s customs-based exports contracted for a sixth straight month in March, falling 4.2% from a year earlier. However, the decline was less severe than the forecast for a year-on-year drop of 14.0% for March in a Reuters poll.
China’s yuan also rebounded from a more than six-week low after the country’s cabinet issued a plan to stabilise its vital trade sector, including supporting exports of automobiles and facilitating visas for overseas businessmen.
Highlights
** Thailand’s jobless rate dropped to 0.9% in February, the lowest level in nearly four years
** The Federal Reserve will publish its internal review of its supervision of Silicon Valley Bank on April 28
** South Korea’s SK Hynix Inc said production cuts by memory chip makers will improve market conditions from the second half of 2023
Comments
Comments are closed.