Asian stock markets slipped yesterday as recession fears mounted over expectations of a further tightening in global monetary policies, days after China's Communist Party sent the world a defiant message.
A gauge of the region's stocks slumped by about 1%, led by technology companies in Hong Kong. Equities also closed lower in Japan and Australia yesterday as traders were discouraged by the fall in US stocks, and worries persisted over the risk of a global recession.
The benchmark Nikkei 225 index fell 1.16% to 26,775.79, while the broader Topix index lost 0.98% to close at 1,879.56. The yen is hovering near a 32-year low, quoting at 148.75 to the US dollar in Asian trade, against ¥148.72 in New York on Friday.
The Stock Exchange of Thailand (SET), however, bounced back in yesterday's afternoon trading on hopes that the Bank of Thailand's Monetary Policy Committee might not lift the interest rate further as inflation slows.
The SET index edged up 0.68% yesterday to finish at 1,571.40.
China's Shanghai Composite paired earlier losses and gained 0.42% in yesterday's trade, while South Korea's Kospi index also recovered earlier losses to close 0.32% higher.
SET trade declined slightly in the early session, in line with Asian markets, but it gained ground in the afternoon after assessing the situation of the US economy, said Apichai Raomanachai, deputy managing director for research at Apple Wealth Securities.
The outlook for consumer prices in the US continues to fuel bets that the Federal Reserve may impose large rate hikes at its next two meetings, weighing broadly on the outlook for global economic growth and markets.
Mr Apichai said the market now expects the Fed to raise interest rates by another 0.75% next month. "Unlike countries in the West where the economy is in recession, Thailand is still on a path of economic recovery," he noted.
Trading rebounded in afternoon trade as investors speculated on listed companies' performances in the third quarter, especially the banking sector, where analysts forecast profit would increase by 20% year-on-year. In addition, foreign investors were continuing to invest as usual and did not sell many Thai stocks, Mr Apichai said.
Over the weekend, Chinese president Xi Jinping gave a speech at the opening ceremony of his ruling party's 20th National Congress where he warned of "dangerous storms" ahead and cautioned against "interference by outside forces" in Taiwan. He said that "China will never promise to renounce the use of force" to achieve reunification with the island.
Besides China's policies, including the zero-Covid measures, Mr Apichart said other risk factors included the Russia-Ukraine war, but analysts believed that Russia would not use nuclear weapons because it was too dangerous.
In addition, many countries are due to report inflation numbers this week, while Australia will release unemployment data and China will make a decision on its prime customer loan interest rate.
Meanwhile, most emerging Asian currencies fell yesterday, after last week's US inflation figures reinforced fears of a global recession based on an aggressive stance by the Fed. South Korea's won, Indonesia's rupiah and Malaysia's ringgit were among the biggest losers, weakening between 0.3% and 0.5%.
The baht fell slightly, in line with the Singaporean dollar and India's rupee. Vietnam's central bank effectively devalued its currency by widening the exchange rate trading band to 5.0%, from 3.0%, following a sharp fall in the currency. The Vietnamese dong was yesterday down 0.66%, hitting a record low of 24,232 per US dollar.
