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Title: Asia shares slide on hawkish Fed, China worries, dollar holds firm

Apr 07, 2022 01:20AM ET

By: AnalysisWatch

Asian stocks retreated on Thursday in line with the global sell-off as markets were spooked by more aggressive voices from US policymakers about the need for tighter monetary policy, which also kept the dollar near a two-year high.

The MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.17% to its lowest level in a week, while Japan's Nikkei fell 1.9%.

The Fed's minutes from its March 15–16 meeting, released on Wednesday, showed deepening concerns among policymakers about the spread of inflation throughout the economy.

U.S. Federal Reserve Governor Lael Brainard said Tuesday that she expects the central bank's balance sheet to shrink rapidly.

Wong said that in the long run, positive real interest rates will be good for the global economy, but in the medium term, there will be a repricing of assets.

All three major US benchmarks fell overnight, with the Nasdaq Composite being the worst performer, losing 2.22%.

Investors were also mindful of rising economic tensions in China, which is grappling with new outbreaks of COVID-19.

Shanghai, where a citywide lockdown is currently in effect, recorded nearly 20,000 new cases on April 6—the vast majority of which were asymptomatic, the local government said Thursday.

Nomura estimated on Tuesday that a total of 23 Chinese cities, which together are home to an estimated 193 million people and account for 22% of the country's GDP, have implemented a full or partial lockout.

Chinese blue chips lost 0.9% and Hong Kong stocks lost 1.3%, weighed down by a decline in large Chinese technology firms.

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