Asia report: Stocks fall on Fed rate hike concerns

Asian stock markets weakened on Friday, after concerns over potential Federal Reserve interest rate hikes took a toll on Wall Street equities.

Japan's Nikkei 225 fell by 0.66% to 27,513.13, while China's Shanghai Composite dropped by 0.77% to 3,224.02.

The Hang Seng Index in Hong Kong declined by 1.28% to 20,719.81, while South Korea's Kospi slid by 0.98% to 2,451.21.

In Australia, the S&P/ASX 200 lost 0.86% to 7,346.80, and the S&P/NZX 50 in New Zealand dropped by 0.11% to 12,144.66.

Among the top losers in Japan were Rakuten, which fell by 5.17%, Recruit Holdings, which dropped by 3.95%, and Okuma Corp, which declined by 2.63%.

In China, Haohua Chemical and China National Software fell by 9.88% and 7.91%, respectively.

Hong Kong’s Baidu, Longfor Properties, and Xiaomi fell by a respective 4.59%, 3.54%, and 3.35%, respectively.

Meanwhile, BK Tops, Dynamic Design, and Hitron Systems in South Korea were among the biggest losers, losing 24.67%, 16.86%, and 9.52%.

In Australia, Block and New Hope Corporation fell by 7.76% and 5.8%, respectively.

“Fed hawks have been out and about on the wires, to underline the central bank’s position as the inflation data burst,” said Neil Wilson of Markets.com of the souring global sentiment.

“St. Louis Fed’s Bullard won't rule out supporting a 50-basis point hike at the next meeting, adding that ‘it will be a long battle against inflation’.

“Cleveland Fed’s Mester said ‘we will need to bring the Fed Funds rate above 5% and hold it there for some time’.

“Fellow Fed hawks Thomas Barkin and Elizabeth Bowman are due on the wires today so expect a bit more of the hawkishness narrative to come through, which may underpin a bid for the dollar and risk-off trade.”

On the economic front, South Korea's finance ministry warned that the country’s economy had slowed amid higher inflation and sluggish exports, predicting a growth rate of 1.6% this year, lower than 2022's figure of 2.6%.

Meanwhile, Thailand's gross domestic product for the fourth quarter of 2022 expanded by 1.4% on an annualised basis, lower than economists' expectations of a 3.5% expansion.

Singapore's non-oil domestic exports in January fell by 25% compared to a year ago, while non-oil re-exports declined by 10.4%.

In Australia, Reserve Bank governor Philip Lowe warned of the risks of high inflation, noting that inflation in the country had reached 7.8% in December 2022, the highest rate since 1990.

Speaking to a standing committee, Lowe called high inflation "damaging" and "corrosive" and warned of the dangers of not containing it in a timely manner.

Oil prices were in the red as the region entered the weekend, with Brent crude futures last down 3.03% on ICE at $82.56 per barrel, and the NYMEX quote for West Texas Intermediate 3.2% lower at $75.98.

In currencies, the yen was last trading 0.61% weaker against the dollar at JPY 134.76, while the Aussie lost 0.77% on the greenback to AUD 1.4649 and the Kiwi retreated 0.82% NZD to change hands at NZD 1.6114.

Reporting by Josh White for Sharecast.com.