By Amber Warrick
Investing.com–Asian stocks were lower on Wednesday as hawkish comments from Federal Reserve officials added to concerns over higher interest rates.
Technology-heavy indexes were the worst performers in the region. South Korea fell 3 percent to a two-year low, while Hong Kong’s index fell 2.4 percent to an 11-year low. Losses mirrored the same trend on Wall Street, as investors cut their earnings from the sector against rising productivity.
Japan’s index fell 2 percent, but lost 2.2 percent.
Sentiment in risk markets was hit by dovish comments from federal officials James Bullard and Neel Kashkari, who warned the United States was at risk of a major recession.
Mary Dalim, president of the San Francisco Fed, said the bank was struggling to strike a balance between reducing inflation and avoiding a recession.
Their sentiment rose to a new 20-year high, pushing the U.S. to the key 4% level. This, coupled with several weak data releases from major economies, led to heavy losses across most asset classes.
The hawkish comments come a few days later and warn that the fight against inflation could threaten economic pain. Rising interest rates have been the biggest weight on stock markets this year.
Asian stocks took a weak lead from Wall Street on Wednesday, as Wall Street has nearly lost all of its gains over the past two years following the Fed’s tight monetary policy.
China’s blue-chip index fell 1.3% on Wednesday, hitting a record low as sentiment for the country worsened.
Chinese stocks are trading near five-month lows, but have fared somewhat better than their Asian peers this year thanks to government stimulus measures.
But a slowdown in Covid-19 cases and a resurgence is expected to weigh heavily on the economy this year.