Equities tumble as US recession fears trigger sell-off
Taiwan down 8.4%, marks worst day
S.Korean shares down 8%, circuit breaker triggered
Malaysian ringgit up 2.3%, its highest since April 2023
Updates as of 0651 GMT
By Sameer Manekar
Aug 5 (Reuters) -Asian equities slumped on Monday, with stocks in Taiwan clocking their worst day, as investors moved out of risky assets on worries the Federal Reserve's protracted fight against inflation may have pushed the U.S. economy too close to a recession.
Most regional currencies leapt higher as the dollar =USD weakened on rising bets of deeper rate cuts by the Fed.
The Malaysian ringgit MYR= soared 2.3% to its highest levels since April last year, and logged its best day since January 2016.
The Singaporean dollar SGD= appreciated as much as 0.4% to its highest level this year, but gave away some gains in the afternoon trade. The rupiah IDR=, the Philippine peso PHP=, and the Thai baht THB=TH also gained ground.
Bleak U.S. economic data last week triggered worries about whether the Federal Reserve will be able to engineer a soft landing for the world's largest economy, and if more aggressive rate cuts would be needed to stave off a slowdown. FEDWATCH
Coupled with rising tensions in the Middle East and worries over tech earnings, the sell-off in equities amplified with tech-heavy benchmarks such as Taiwan .TWII and South Korea .KS11 plunging more than 8% each.
Taiwan stocks have lost around 19% since their all-time high in mid-July, but were still up around 11% since the start of the year.
"What we are looking at now is a situation where the market is viewing what's going on in the U.S. macro economy as ticking the recession box," Robert Carnell, regional head of research, Asia-Pacific at ING, said.
"It's all flicked from being inflation falling fast enough and the Fed easing in September, to the economy is perhaps hurtling off the rails and the Fed not going to be able to do enough to stop that from getting worse."
An MSCI index of Asian emerging markets equities .MIMS00000PUS, in which Taiwan holds nearly a quarter of weightage, fell as far as 5% to mark its worst day since March 2020.
Regional bonds found favour with investors fleeing equities; yields on India's 10-year bonds IN10YT=RR fell to their lowest level since March 2022, while those on Indonesian notes ID10YT=RR slipped to 6.770%, their lowest since mid-May.
Analysts at Maybank expect the Indonesian bond market to "receive more flows from global investors" on worries of a U.S. slowdown, expecting the 10-year yield to end the week at 6.640%.
In Southeast Asia, losses in equities deepened in the afternoon trade, with the Singaporean benchmark .STI losing as much as 4.9% in its worst day since March 2020.
Stocks in Indonesia .JKSE, Thailand .SETI and the Philippines .PSI lost between 2% and 4%.
Meanwhile, data showed annual economic growth in Indonesia held just above 5% in the June quarter, in line with expectations.
HIGHLIGHTS:
** Taiwan Stock Exchange says market risk control mechanism is effective
** Korea exchange triggers circuit breakers on KOSPI .KS11 after index falls 8%
** Philippine c.bank says rates can stay steady; open for cut when price pressures ease
** Mexican peso MXN= down as much as 4.6%, lowest level since Oct 2022
Asia stock indexes and currencies as at 0651 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +2.49 | -1.34 | .N225 | -12.40 | -5.99 |
China | CNY=CFXS | +0.41 | -0.61 | .SSEC | -1.23 | -3.54 |
India | INR=IN | -0.10 | -0.75 | .NSEI | -2.87 | 10.47 |
Indonesia | IDR= | +0.06 | -4.88 | .JKSE | -3.66 | -3.19 |
Malaysia | MYR= | +1.70 | +3.85 | .KLSE | -3.75 | 6.60 |
Philippines | PHP= | +0.12 | -4.27 | .PSI | -2.58 | -0.24 |
S.Korea | KRW=KFTC | -1.37 | -6.31 | .KS11 | -8.77 | -8.05 |
Singapore | SGD= | +0.14 | -0.43 | .STI | -4.86 | -0.72 |
Taiwan | TWD=TP | +0.37 | -5.99 | .TWII | -8.35 | 10.60 |
Thailand | THB=TH | +0.11 | -3.05 | .SETI | -1.95 | -9.07 |
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Sameer Manekar in Bengaluru; Editing by Sherry Jacob-Phillips
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