Asian stocks reach two-year low, dollar bites yen and pound

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MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.87%, while the Nikkei share average fell 0.18%

Singapore — Asian stocks wallowed at two-year lows on Wednesday, after a strengthening dollar, instability in the UK bond market and upcoming US inflation data spelt a wild session on Wall Street and further volatility for investors.

“In the UK situation, they have inflation which is high, and under the Kwarteng fiscal-policy package, they were actually going to drive that even higher,” said Damien Boey, chief macro strategist at Barrenjoey in Sydney. “So, you’re actually forcing the [BOE] to do more work than it needs to — the risk premium in the gilts market goes up quite a lot.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.87%, while Seoul’s Kospi index fell 0.41% and Australia’s resources-heavy index was up 0.05%.The British financial turmoil combined with a burst of US dollar strength sent the sterling to a two-week low of 1.0949, while the risk-sensitive Australian dollar fell to $0.6247, the lowest since April 2020.The International Monetary Fund cut its 2023 global growth forecast from 2.9% to 2.

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