Asian markets fell yesterday after the Federal Reserve’s new chairwoman hinted that US interest rates may rise earlier than expected.
All of the region’s major indices ended the day in the red in response to remarks made on Wednesday by Janet Yellen in her inaugural speech as the chairwoman of the Federal Reserve.
“It’s hard to define but, you know, it probably means something in the order of around six months or that type of thing,” said Ms Yellen when answering a question on how long the Fed would wait to raise interest rates after halting its asset purchases.
With those purchases likely to be stopped in October of this year, her remarks appeared to imply a rise in interest rates in April next year, earlier than had been predicted.
Markets immediately reacted, even though most analysts believe that the Fed has no fixed date in mind for raised interest rates.
Hong Kong’s Hang Seng index led the sell-off with a fall of 1.8 per cent, compounded by increasing investor jitters related to the Chinese economy.
Goldman Sachs announced late on Wednesday that it was cutting its Chinese GDP growth forecast for this year to 7.3 per cent from 7.6 per cent, citing disappointing trade and consumption data.
Earlier this week, the Chinese e-commerce giant Alibaba announced that it had chosen New York over Hong Kong for a US$15 billion stock offering.
The Hang Seng China Enterprises Index – a key index of Chinese stocks – closed down 1.7 per cent on the day, entering a bear market.
Japan’s Nikkei 225 ended the day down 1.6 per cent at 14,224.23 points, while the Sensex was down slightly by 0.42 per cent.
The Asian sell-off spread to European bourses, with the FTSE 100 and Dax down by more than 1 per cent in early trading.
In the UAE, the Dubai Financial Market General Index closed up 1 per cent, boosted by Union Properties, Arabtec and Dubai Investments.
The Abu Dhabi Securities Exchange General Index fell 1 per cent, dragged down by Eshraq and RAK Properties.
The US dollar rose on Thursday, building on strong gains after Ms Yellen’s remarks.
The dollar advanced 0.5 per cent to $1.3761 per euro as in early trading in New York yesterday after climbing 0.7 per cent on Wednesday. It gained 0.2 per cent to ¥102.54 after jumping 0.9 per cent on Wednesday.
jeverington@thenational.ae
* with Bloomberg News
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