Asian stocks slide as expectations for aggressive US rate hikes rise

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MSCI’s broadest index of Asia-Pacific shares outside Japan extend losses

Hong Kong — Asian shares slid sharply on Tuesday after Wall Street hit a confirmed bear market milestone and treasury yields struck their highest in more than a decade on fears aggressive interest rate hikes would push the world’s largest economy into recession.

The negative tone in Asia follows a bleak US session on Monday, which saw Goldman Sachs forecast a 75 basis point interest rate hike at the Federal Reserve’s next policy meeting on Wednesday. “The US market is the biggest in the world so when it catches a cold the rest of the world does as well,” said Clara Cheong, global market strategist at JP Morgan Asset Management.

On Wall Street overnight, fears of a US recession kicked the S&P 500 down 3.88%, while the Nasdaq Composite lost 4.68%. The Dow Jones industrial average fell 2.8%. The yield on benchmark 10-year treasury notes rose to 3.3466% compared with its US close of 3.371% on Monday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 3.3804% compared with a US close of 3.281%.

 

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