Asia report: Stocks weaker after China, US central bankers speak
By Josh White
Date: Friday 22 Apr 2022
(Sharecast News) - Most stock markets were weaker as they closed in Asia on Friday, as investors reacted to comments from central bankers in both China and the United States.
In Japan, the Nikkei 225 was down 1.63% at 27,105.26, as the yen weakened 0.1% against the dollar to last trade at JPY 128.51.
It was a negative day for the benchmark's major components, with automation specialist Fanuc down 1.82%, fashion firm Fast Retailing losing 2.7%, and technology conglomerate SoftBank Group tumbling 3.01%.
The broader Topix index was 1.19% weaker by the end of trading in Tokyo, settling at 1,905.15.
On the mainland, the Shanghai Composite managed gains of 0.23% to 3,086.92, and the smaller, technology-heavy Shenzhen Composite was 0.5% lower at 1,914.11.
Yi Gang, governor of the People's Bank of China, said during the day that the country's central bank would maintain monetary policy and up its economic support.
The governor, speaking at the annual Boao Forum for Asia, said the central bank's priority was keeping prices for food and energy stable.
Investors had spent much of the week looking for signs of economic support from Beijing, as the country grappled with its worst Covid-19 outbreak since the emergence of the coronavirus, centred in Shanghai.
China's economic heart remains under strict measures to try and contain the outbreak, as Chinese authorities maintain their increasingly controversial 'zero-Covid' policy.
South Korea's Kospi was off 0.86% at 2,704.71, while the Hang Seng Index in Hong Kong was down 0.21% at 20,638.52.
Big Chinese technology plays were in the red in the special administrative region, with Alibaba Group down 1.42% and Tencent Holdings losing 2.13%.
Despite those losses, the Hang Seng Tech Index still managed to end the day 0.28% firmer.
The blue-chip technology stocks were on the back foot in Seoul as well, with Samsung Electronics down 1.03%, and SK Hynix losing 2.21%.
Sentiment was dented by hawkish comments from the chair of the US Federal Reserve early in the Asian day, as Jerome Powell signalled his support for a 50-basis point rate hike next month.
Speaking at an event in Washington hosted by the International Monetary Fund, Powell said the Fed was committed to "expeditiously" raising interest rates to contain red-hot inflation.
"Remarks from Fed chair Powell were the main cause of the turnaround, as he stated that it was 'appropriate' to be 'moving a little more quickly', and that 'there's something in the idea of front-end loading whatever accommodation one thinks is appropriate'," noted Interactive Investor head of markets Richard Hunter.
"Quite apart from the widely expected 0.5% rate hike in May, this could also imply similar rises in subsequent months."
Hunter said that, while the news was not too much of a surprise, investors still rushed for the exit as concerns of over-tightening and recession came back into focus.
"Even without the current inflationary pressures, it is unclear whether underlying supply chain disruptions are clearing, and whether the slow uptake of labour participation in the US will unravel.
"In the meantime, while corporates are for the most part dealing with the challenges, pricing pressures are unlikely to evaporate in the shorter term."
Oil prices were lower as the region entered the weekend, with Brent crude futures last down 1.44% on ICE to $106.77, and West Texas Intermediate losing 1.45% on NYMEX to $102.29 per barrel.
In Australia, the S&P/ASX 200 dropped 1.57% to 7,473.30, while across the Tasman Sea, New Zealand's S&P/NZX 50 was 0.38% weaker at 11,908.40.
The down under dollars were both weaker against the greenback, with the Aussie last off 0.88% at AUD 1.3687, and the Kiwi retreating 0.92% to NZD 1.4989.
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