Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Asian Stocks Dented by Hawkish Fed, China Power Crunch

Published 08/24/2022, 12:44 PM
Updated 08/24/2022, 12:44 PM
© Reuters.

© Reuters.

By Ambar Warrick

Investing.com-- Asian stocks sank on Wednesday following hawkish comments from a Federal Reserve official, while concerns over a drought-driven power shortage in China also weighed on sentiment.

Chinese stocks were among the worst performers in the region, with the blue-chip Shanghai Shenzhen CSI 300 index down 1.2%. The Shanghai Composite index fell 1.4%.

Industrial and automobile stocks, including Advanced Technology & Materials Co Ltd (SZ:000969) and Anhui Jianghuai Automobile Group Corp Ltd (SS:600418) were the worst performers on the blue-chip index, down nearly 10% each.

Sentiment towards Asian markets was dented by comments from Minneapolis Fed President Neel Kashkari, who said the Fed is likely to keep raising interest rates until inflation is brought under control.

His comments supported the dollar and drove investors out of most risk-driven assets. They also come ahead of Fed Chairman Jerome Powell's address to the Jackson Hole Symposium this Friday.

Asian markets traded lower in anticipation of the address, with traders fearing that the Fed Chair will reiterate the central bank's hawkish stance.

Concerns over a power shortage in China also weighed on most Asian equities, given the country’s position as a trading hub for the region.

China is facing a severe heatwave, which has dried up several riverbeds and caused power shortages in regions dependent on hydroelectric power. The power crunch has also affected industrial activity in some parts of the country, with investors fearing it could spread to major hubs such as Shanghai.

While the power crunch is expected to ease after Summer, it comes during a time when the Chinese economy is struggling to recover from a series of damaging COVID lockdowns.

Industrial activity in the country is already in contraction territory.

In Southeast Asia, Thai stocks fell 0.2% after data showed the country’s trade deficit widened in July, amid falling exports. Philippine stocks bucked the trend, rising 0.7% on bargain buying into index heavyweights such as Ayala Corp (PS:AC).

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.