By Ambar Warrick
Investing.com-- Asian stock markets tumbled on Tuesday tracking steep declines in Wall Street amid growing expectations that the Federal Reserve will maintain its pace of sharp interest rate hikes.
Technology-heavy indexes including Hong Kong’s Hang Seng, the Taiwan Weighted Index, and South Korea’s KOSPI were the worst performers in morning trade, losing between 0.8% and 1%.
Wall Street indexes tumbled overnight, with losses skewed towards technology stocks as investors discounted the sector against rising interest rates.
Despite data earlier this month showing a slight easing in U.S. inflation, a majority of traders are now pricing in a 75 basis point hike by the Fed in September. Strong jobs data, coupled with hawkish comments from several Fed officials have driven this notion.
Focus this week is on Fed Chair Jerome Powell’s address to the Jackson Hole Symposium, where the chair is expected to dismiss speculation over a potential dovish pivot by the Fed.
Even as inflation cooled slightly in July, it remains pinned around 40-year highs.
China’s blue-chip Shanghai Shenzhen CSI 300 index fell 0.6%, while the Shanghai Composite index shed 0.3%. Stocks in the country had risen on Monday after the People’s Bank of China cut interest rates to stimulate economic growth.
But signs of weakness in the Chinese economy are a bearish signal for broader Asian markets, given that the country is a major trading hub for the region.
Japan’s Nikkei 225 fell 1% after preliminary data showed Japan’s manufacturing sector grew at its slowest pace in 19 months in August. The Japanese economy is facing strong headwinds from rising commodity prices and the declining value of the yen.
Singapore stocks fell slightly, ahead of data that is expected to show the island state's CPI inflation touched a 14-year high in July. The reading is likely to spur more tightening measures by the Monetary Authority.
Bucking the trend, Indonesian stocks rose 0.6% ahead of an interest rate decision by the central bank. The bank is widely expected to hold rates at 3.5%, amid mild inflationary pressures on the economy.