By Ambar Warrick
Investing.com-- Most Asian stock markets tumbled on Monday after hawkish comments from Federal Reserve Chair Jerome Powell showed that the central bank had no intention of slowing its pace of interest rate hikes.
Bourses in Japan, Taiwan and South Korea were the worst performers in morning trade, losing over 2% each.
Losses in regional markets tracked a bruising session on Wall Street last week, which saw the three main indexes lose between 3% and 4%. The weakness in equities comes after Powell, during his address to the Jackson Hole Symposium, said the Fed has no plans for a dovish pivot, and intends to continue raising interest rates.
Powell also warned that U.S. economic growth may be dented by high interest rates and elevated inflation levels.
The Fed Chair’s comments spurred increased bets that the Fed will raise rates by 75 basis points in September, and that interest rates will end the year well above 3%.
“Fed Chair, Jerome Powell did what he needed to do last Friday at Jackson Hole, and that was to make it clear that the Fed’s over-riding priority was to get inflation down…not give assurances that they would be gentle with markets,” analysts at ING wrote in a note.
Focus now turns to U.S. payrolls data due later in the week. A strong jobs market could give the central bank even more room to tighten monetary policy.
China’s bluechip Shanghai Shenzhen CSI 300 index slipped 0.6%, while Hong Kong’s technology-heavy Hang Seng index lost 0.7%.
China is struggling with a severe drought in some provinces, which has caused a power shortage and has also disrupted industrial activity in some parts of the country. Data over the weekend also showed China’s industrial profits continued to decline in July.
In the Asia-Pacific region, Australian stocks slumped nearly 2% on continued concerns over major trading partner China.
Shares of Fortescue Metals Group (ASX:FMG), the world’s fourth-largest iron ore producer, dropped over 4% after the miner logged a 40% decline in its annual profit.