Asian Stocks Turn Red After Powell Speech About Higher Rates

Asian Stocks Turn Red After Powell Speech About Higher Rates by Adam Rosen last updated on March 20, 2023

Asian Stocks Turn Red After Powell's Speech About Higher Rates

Fed Chair Jerome Powell has finally made it clear in his recent speech that high-interest rates are here to stay. He even went as far as to say that the interest rate will stay elevated even longer than initially expected.

As a result of this policy statement by Powell, the Asian stocks turned read and were last seen on the defensive. In addition, the Chinese economic situation is also making the sentiment worse for Asian stocks.

All Asian Markets Are Down

In China, the famous Shanghai Composite index was down by 0.5%, while the CSI 300 was down by 0.7% after Powell's speech. This comes at a time when both of these indexes registered heavy losses in the previous session.

Recent data from China shows that the country had a major trade surplus during the months of January and February. In other words, China's imports saw a sharp decline which points toward low local demand.

And if we look at the tech-heavy indexes, such as Hang Seng Index from Hong Kong, it also dropped by 2.7% after the speech.

But the worst performance for the day was seen in the KOSPI from South Korea, which lost 1.4%. Similarly, the Taiwan Weighted Index was also down by 1.4% for the day.

Overall, the sentiment in the Asian markets remained negative due to the policy remarks by the Fed Chair.

Looking ahead, we have the Fed's Beige Book and NFP (non-farm payrolls) data from the US which will provide fresh signals on where the US economy is headed.

If we look at Japan's Nikkei 225, it appears to be in a different direction than the rest of the Asian markets. After Powell's comments, the Nikkei 225 was up by 0.3%. Experts believe that this minor upside can be attributed to the reaffirmation that Japan will keep to its current accommodative policy.

The current policy might be bad news for the JPY but it is indeed good news for the Japanese stock markets!