Asian investors resume selloff on rate fears as Powell speech looms

AFP :
Asian markets sank Friday as a mini rally came to a juddering halt ahead of a keenly awaited speech by Federal Reserve boss Jerome Powell later in the day, with traders increasingly worried the bank will hike interest rates further.

The losses tracked a sell-off on Wall Street, where tech titans including Amazon and Apple were among the big losers as Treasury yields rose and data indicated the US jobs market was still resilient in the face of tighter financial conditions.

The Fed’s insistence that decision-making would be data-dependent has seen traders react to most economic indicators in a “good news is bad news” fashion, with healthy data seen as likely pressuring officials to hike to temper inflation.

A string of positive readings on the economy and jobs have weighed on equities this month, while policymakers appear split on the best way forward as they try to tame prices while looking to avoid causing a recession.

Markets enjoyed a strong end to July on optimism that that month’s rate hike would be the last, with inflation continuing to ease and other data showing a softening in the economy.

Some observers even suggested a cut could be on the cards at the end of the year or early 2024.

But that has given way to the realisation that more work is needed to get inflation down to — and held at — the Fed’s two percent target.