Asian markets mostly down but China data offers some light

Most Asian markets fell again Thursday as traders fear that hefty rate hikes to rein in soaring inflation will spark a recession, though a slight improvement in Chinese data did provide some cheer.

The rally enjoyed across the world last week appears to have given way to nervousness about the economic outlook, while the Ukraine war continues to sow uncertainty.

The surge in inflation to multi-decade highs has forced central banks to swiftly tighten pandemic-era monetary policies, dealing a hefty blow to equities, particularly tech firms who are susceptible to higher borrowing costs.

The Federal Reserve has already sharply lifted rates and is expected to announce a second successive 75-basis-point lift next month.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

Fed boss Jerome Powell this month admitted the moves could lead to a contraction, suggesting he was not averse to it.

On Wednesday, Cleveland Fed chief Loretta Mester said was keen to see the benchmark rate hit 3-3.5 percent this year and “a little bit above four percent next year”.

“There are risks of recession,” she told CNBC. “We’re tightening monetary policy. My baseline forecast is for growth to be slower this year.”

The threat of an extended period of elevated inflation and rate hikes has left traders weary, and markets in the red.

While Wall Street ended on a tepid note Wednesday it was unable to bounce back from the previous day’s plunge.

And Asia also struggled, with Tokyo, Sydney, Seoul, Singapore, Taipei, Manila and Wellington all down.

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