Asian Shares Tumble With Rate Hikes In Focus

Asian stocks tumbled on Tuesday as investors awaited the outcome of FOMC meet on Wednesday, which is expected to give clues on its monetary policy direction.

Fed funds futures, which track short term rate expectations, have priced in a total of four rate increases this year.

Geopolitical tensions also remained on investors’ radar after NATO announced that it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.

Chinese shares fell sharply amid Omicron, rate hike and Ukraine worries. The benchmark Shanghai Composite index slumped 91.04 points, or 2.58 percent, to 3,433.06 while Hong Kong’s Hang Seng index ended down 412.85 points, or 1.67 percent, at 24,243.61.

Japanese shares ended at five-month low on concerns over U.S. rate hikes and investor caution over the situation in Ukraine. The Nikkei average tumbled 457.03 points, or 1.66 percent, to 27,131.34, marking the lowest close since Aug 20. The broader Topix index closed 1.72 percent lower at 1,896.62.

Start-up investor SoftBank Group declined 5.3 percent and chip-making equipment maker Tokyo Electron lost 2.7 percent.

Management consulting services firm Nihon M&A Center Holdings sank 12.2 percent after postponing the release of its third-quarter financial results.

Australian markets hit eight-month low as higher-than-expected inflation data spurred expectations of a quicker-than-expected rate hike.

The benchmark S&P/ASX 200 fell 177.90 points, or 2.49 percent, to 6,961.60, hitting its lowest close since last May. The broader All Ordinaries index dropped 193.40 points, or 2.60 percent, to 7,248.10.

Energy stocks tumbled to their worst day in 1-1/2 years, with Woodside Petroleum and Santos losing 4-5 percent. Tech stocks hit their lowest close since Sept. 2020, with Computershare, Xero and Wisetech Global falling 2.6 percent, 3.5 percent and 6.6 percent, respectively.

U.S.-based buy now, pay later company Sezzle soared 9.8 percent after confirming merger talks with larger Australian rival Zip Co.

Seoul stocks logged the biggest daily drop in 11 months and tumbled to an almost 14-month low amid massive foreign sell-off.

The Kospi average fell 71.61 points, or 2.56 percent, to close at 2,720.39, marking the lowest level since the 2,700.93 point closing on Dec. 8, 2020 as investors braced for hawkish comments from the U.S. Federal Reserve.

Market bellwether Samsung Electronics declined 1.5 percent, battery maker LG Chem lost 4.2 percent and Samsung SDI slumped 5.9 percent.

bank of Korea data showed earlier in the day that Asian fourth-largest economy expanded at the fastest pace in 11 years in 2021 helped by a jump in exports and construction activity.

New Zealand shares fell for a fifth consecutive session, though A2 Milk shares soared on the buzz the infant formula exporter could be a takeover target for a Canadian dairy firm.

The benchmark NZX-50 index dropped 62.85 points, or 0.52 percent, to 12,128.21 while A2 Milk shares jumped 6.2 percent. Investors ignored data showing an improvement for the services index in December.

U.S. stocks recovered from an early sell-off to end modestly higher overnight as the recent pullback in risk assets appeared overdone.

The Dow dropped over 1,000 points at its worst to reach its lowest level in more than nine months before ending the day 0.3 percent higher.

The Nasdaq Composite plunged as much as 4.9 percent to hit multi-month lows before closing 0.6 percent higher while the S&P 500 edged up 0.3 percent.

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