Asian Markets Plummet: Asian market prices hit their lowest point ever and in nine months on Thursday. At the same time, the dollar reached its two-month high. Concerns over China’s sluggish economic recovery and the Federal Reserve raising interest rates surprised market players.
The MSCI Asia-Pacific stock index, excluding Japan, dropped to 495.03. The lowest since November last year. Despite a brief rebound, it lost 0.49 percent and finished at 500.43. This poor performance dropped the gauge by 8% in August, making it the worst month since September.
European stock markets are likewise pessimistic. The Eurostoxx 50 index, German DAX, and FTSE futures all fell 0.51%.
The European STOXX 600 touched its worst one-month low. The index is largely dragged down by high-end names affected by Chinese spending.
China’s current economic figures show a gloomy development potential after COVID-19. Investors are skeptical and want more stimulus despite government efforts to restore market trust.
The CSI 300 Index, which tracks China’s largest enterprises, did not change Thursday. The Hang Seng Index in Hong Kong also fell slightly. The index touched a nine-month low earlier that day, causing alarm.
HSBC Chief Asia Equity Strategist Herald van der Linde speculated that Chinese government may take greater action. He also noted that many people don’t want to profit from Chinese enterprises, which he attributed to investors’ declining trust. Customers could benefit from a stimulus, he argued.
China’s economy is hampered by a worsening real estate crisis. Zhongzhi Enterprise Group informed investors on Thursday that it may soon run out of cash and may restructure its debt.
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Zhongzhi announced the news after discovering at the end of July that Zhongrong International Trust Co., a significant trust company he oversaw, had not paid its obligations.
Wall Street’s luck also fell after the July Fed meeting revealed that officials disagreed on raising interest rates again. Some officials were concerned about the economic consequences of a hefty rate increase, according to the minutes. Most people still believed in vigorous inflation fighting.
The US Federal Reserve Board of Governors did nothing in June. They raised interest rates 25 basis points in July. ING analysts indicated a rate hike could happen later this year, but not in September because to the likelihood of a recession. This is because ING experts expect a rate hike later this year.
The CME FedWatch tool shows that market players expect rates to stay the same in October but rise in November. The July increase in single-family home construction has given some confidence for the American economy. This has changed economists’ recession predictions. The Federal Reserve staff also altered their recession predictions, appearing more confident about the economy’s prospects.
Changes in rate predictions affect Treasury yields. Asian trade saw the 10-year Treasury yield reach 4.298%. Because of how the US dollar performed against six other currencies, the dollar index reached its greatest level in two months. This happened because more people desired safer activities.
Meanwhile, the Japanese yen plummeted to its lowest level versus the dollar in nine months, and market investors are watching for government intervention. Oil prices fall in the commodity market. US and Brent crude oil prices fell simultaneously. Rising interest rates have lowered gold prices to their lowest level in five months.