Asian markets retreated yesterday on fears about an expected US interest rate rise this year, while the pound recovered after suffering a series of losses fuelled by worries over Britain’s EU exit.
Samsung Electronics suffered another bout of selling in the morning after announcing Tuesday it would scrap the troubled flagship Galaxy Note 7 over an exploding battery crisis.
Shares later staged a partial recovery to end around 10% down so far this week.
The regional retreat follows sharp falls on Wall Street, where investors were spooked by below-forecast earnings from aluminium-maker Alcoa.
The figure raised concerns about the state of corporate America going into the reporting season.
Markets are keenly awaiting the release of minutes from the Federal Reserve September policy meeting, hoping for a clue about the bank’s plans for raising borrowing costs.
A string of recent upbeat data on the world’s top economy, and increasingly positive comments from Fed boss Janet Yellen, have fuelled speculation rates will rise by year-end.
“Stock markets are becoming nervous about the prospect of rising interest rates against a background of moderate profit growth and relatively high valuations,” Ric Spooner, chief market analyst in Sydney at CMC Markets, said in an e-mail.
“Given how critical the interest rate outlook is at the moment, markets will be focused on the degree of support for a rate hike this year revealed in the Fed minutes,” he said, according to Bloomberg News.
Tokyo ended 1.1% lower, while Hong Kong — where monetary policy is tied to that of the United States — ended off 0.6%. Shanghai slipped 0.2%, Sydney was off 0.1% and Singapore shed 1.1%. Bangkok dived as much as 6.8%. The index had already lost more than 4% this week on worries about the health of King Bhumibol Adulyadej, with many fearing economic instability after his death.
The prospect of a US rate rise has bolstered the dollar in recent weeks.
The pound has taken a particular hiding as Britain’s leaders bicker over how to leave the EU, with many fearing a “hard Brexit” with no access to the single market after leaving.
Sterling has lost nearly 18% to sit at 31-year lows against the greenback since British voters narrowly approved Brexit in a referendum in June.
However, it edged up yesterday after Prime Minister Theresa May acknowledged that parliament should be allowed to vote on the country’s plans for leaving, an idea she had previously dismissed.
The news raised hopes London could agree to negotiate better post-Brexit terms.
The pound rose to $1.2305 from $1.2257 in New York, while the euro slipped to 89.85 pence from 91.15 pence.
In Seoul, the KOSPI edged up 0.1% as market heavyweight Samsung Electronics recovered from a 2% early loss to end just 0.7% lower.
The South Korean giant has been hammered this week after warning customers to stop using the Note 7 and stopping production, then later saying it had completely scrapped the flagship handset.
After trade Wednesday it lowered its third-quarter operating profit estimate by a third, citing the impact of the battery crisis.
The announcements come a little over a month after Samsung announced a recall of 2.5mn Note 7s following complaints that its lithium-ion battery could catch fire.
In Tokyo, the Nikkei 225 down 1.1% at 16,840.00 points; Hong Kong — Hang Seng down 0.6% at 23,407.05 points and Shanghai — Composite down 0.2% at 3,058.50 points at the close yesterday.
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