Asian equities slump to multi-year lows on US recession risk
Taiwan down 8%, worst day since May 2021
S.Korean shares fall most since onset of pandemic
MSCI EM Asia equities gauge at three-month low
Malaysian ringgit at 15-month high
Indonesia Q2 GDP awaited
By Sameer Manekar
Aug 5 (Reuters) -Stocks in Taiwan plunged nearly 8% on Monday, underscoring a global sell-off that has spilled over into Asian emerging equities as market participants fear the United States could be heading for a recession.
Investors globally rushed out of risky assets into safer bonds after bleak U.S. economic data triggered worries about whether the U.S. Federal Reserve will be able to engineer a soft landing for the world's largest economy, and whether it requires more aggressive interest rate cuts to stave off slowdown.
"Markets are worried about recession and think the Fed may now be behind the curve," MUFG senior currency analyst Lloyd Chan wrote in a client note.
Markets are now wagering a near 70% chance the Fed will not only cut rates in September but ease by 50 basis points. FEDWATCH
MSCI's broadest gauge of Asia-Pacific equities .MIAP00000PUS slumped 3.8% to mark its worst day since late February 2021, while an index of Asian emerging markets equities .MIMS00000PUS was at a three-month low.
Taiwan's benchmark .TWII plummeted 7.9% to its lowest since late April, clocking its worst intraday drop since May 2021. Equities in South Korea .KS11 lost more than 5% in their worst fall since the onset of the COVID-19 pandemic in March 2020.
In Southeast Asia, the Singaporean benchmark .STI fell 3.6% to mark its worst day in more than two years, while stocks in Indonesia .JKSE and the Philippines .PSI lost around 2%.
Currencies in the region leapt higher as the dollar =USD weakened on rising bets of deeper rate cuts by the Fed.
The Malaysian ringgit MYR= soared 1.5% to its highest since late April last year, while the usually tepid Singapore dollar SGD= was last trading at its highest level this year so far.
The Indonesian rupiah IDR= advanced 0.4% to a nearly three-week high and seemed to be heading toward 16,000 which it breached in late May. Benchmark 10-year yields ID10YT=RR fell as far as 6.788%, the lowest since mid-May.
Investors are awaiting second-quarter Indonesian gross domestic product data due later in the day.
"A potentially weaker Q2 GDP data from Indonesia ... could still somewhat weigh on market sentiment," said MUFG's Chan.
Elsewhere, the Philippine peso PHP= and Thai baht THB=TH added around 0.2% each.
HIGHLIGHTS:
** Japan's Nikkei .N225 at seven-month low, yen JPY=EBS highest since mid-January
** Sidecar trading curb activated on South Korea's KOSPI market
** U.S. 10-year Treasury note US10YT=RR touches more than one-year low
Asian stock indexes and currencies at 0300 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.94 | -2.83 | .N225 | -4.63 | 2.34 |
China | CNY=CFXS | +0.39 | -0.63 | .SSEC | -0.29 | -2.62 |
India | INR=IN | - | -0.65 | .NSEI | - | 13.74 |
Indonesia | IDR= | +0.43 | -4.53 | .JKSE | -2.02 | -1.54 |
Malaysia | MYR= | +1.47 | +3.61 | .KLSE | -2.53 | 7.95 |
Philippines | PHP= | +0.12 | -4.27 | .PSI | -2.13 | 0.22 |
S.Korea | KRW=KFTC | -0.22 | -5.22 | .KS11 | -5.49 | -4.74 |
Singapore | SGD= | +0.20 | -0.37 | .STI | -2.77 | 1.47 |
Taiwan | TWD=TP | +0.36 | -6.01 | .TWII | -6.35 | 13.01 |
Thailand | THB=TH | +0.06 | -3.11 | .SETI | -1.58 | -8.72 |
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Sameer Manekar in Bengaluru; Editing by Christopher Cushing
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