HONG KONG: Asian markets resumed their downward spiral on Wednesday (Sep 21) after a brief respite the previous day, as traders prepared for what many expect to be a third straight three-quarter point rate hike by the Federal Reserve.
Equities around the world have been clattered by fears of a recession
in major economies as central banks ramp up borrowing costs to combat
the highest inflation in decades, which has been compounded by the
Ukraine war and supply chain snarls.
In Washington, the Fed is due to conclude its latest policy meeting, with most analysts predicting it will announce another 75 basis-point lift, though some have tipped a full percentage-point move.
However, while the hike has largely been priced into the markets, the US central bank's forecast and post-meeting comments from boss Jerome Powell are the main attraction for investors.
"Volumes remain light and the mood cautious, with few looking to take on large positions before hearing what the Fed says and where policymakers see rates going by the end of the hiking cycle," Fiona Cincotta, at City Index, said.
"This is what will drive the markets, not the rate hike ... but what the Fed plans to do next."
Fed officials have for months stuck to the mantra that they will only ease up on their hawkish drive when inflation comes down and remains subdued.
This has led many to warn that rates are unlikely to come down anytime soon, possibly as late as 2024, with a recession more than likely in the United States as well as other major economies.
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