Asian stocks head for 1-year low
Emerging market currencies gain on expectations of higher interest rates in economies, including Indonesia
Sydney: Asian stocks fell, with a regional benchmark heading for the lowest close in a year as investors contemplate the risk of weaker growth thanks to woes in emerging-markets. The yen gained.
With expectations building of higher interest rates in economies including Indonesia, Asian emerging currencies opened higher Wednesday, with the rupiah leading gains. A tumble in US tech shares overnight, thanks to executives of some heavyweights facing increased scrutiny on Capitol Hill, made for a poor tone in Asia. Japanese and Australian shares dropped, though South Korea bucked the trend. Ten-year Treasury yields held at 2.90%.
Investors remained focused on the sell-off in emerging markets. Prominent voices on Wall Street are also warning that US stocks face headwinds — Citigroup Inc. cited sentiment levels as it cautioned that another pullback may be in the offing and Goldman Sachs Group Inc. said elevated valuations and a tightening labor market have driven the firm’s bull/bear market indicator to alarming highs.
“Contagion is a normal reaction,” George Boubouras, director at Salter Brothers Asset Management, said on Bloomberg Television. While valuations are compelling, “they’re going to become more compelling as it spreads a little bit further in the rout.”
Read how the birthplace of the Asian crisis in 1990s has become a haven during turmoil
Elsewhere, the British pound held gains after being whipsawed amid Brexit discussions. Gold climbed, while West Texas Intermediate oil held below $70 a barrel on concerns about a stockpile buildup. Bitcoin fell after a report that Goldman Sachs was said to delay setting up a trading desk for cryptocurrencies.
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