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ASIA MARKETS: Shares Fall As More Fed Officials Signal March Rate Hike

Friday,   14-Jan-2022   09:35 AM (IST)

Asian shares declined on increasing likelihood that the U.S. Federal Reserve could begin its rate-hiking cycle as soon as in March. Shares dropped 1.8% in Japan, declined 1.4% in South Korea, and slipped 1% in Australia. Chinese equities lost 0.4% and Hong Kong’s index fell 0.9%. The FTSE Bursa Malaysia KLCI Index fell 0.8% to 1,556.80, led by Inari Amertron and Top Glove. All but three of the KLCI’s 30 constituents declined. Futures indicated that the S&P 500 Index was poised to extend yesterday’s losses. The U.S. gauge dropped 1.4% yesterday as Fed officials continued to indicate that a rate increase at the March meeting was warranted to combat the inflation threat. After three officials on Wednesday threw their support for the liftoff in March, Fed Governor Lael Brainard said yesterday that the Fed will be in a position to increase interest rates after the bond-buying program wraps up. If the Fed does not make any changes to the pace of bond purchases at this month’s meeting, the bond purchases will wrap up in March. Brainard has been nominated by President Joe Biden to be the Vice Chair and the comments came at her confirmation hearing. Chicago Fed President Charles Evans said three or four rate hike may be needed this year. Richmond Fed President Thomas Barkin said if inflation remained elevated and broad-based, more aggressive policy normalization was needed. The dollar once again failed to get a lift from the prospect of faster Fed rate hikes. The dollar index dropped to near 94.70, hovering near two-month lows. The gauge is now down 1.3% despite rising Treasury yields. Asian currencies were trading mixed. The Thai baht inched higher, the Malaysian ringgit dropped, and the Chinese yuan and the South Korean won were little changed.