Asia stocks sink as recession, rate hike fears persist By Investing.com

By Ambar Warrick

Investing.com– Asian stocks fell on Monday, extending losses from last week as concerns over rising interest rates and a potential recession in 2023 weighed on sentiment, with uncertainty over China’s economic reopening also denting regional markets.

Japan’s was among the worst performers for the day, losing 1.1% amid renewed speculation that the Bank of Japan (BoJ) could tighten its ultra-loose monetary policy.

said that the Japanese government is considering the revision of the BoJ’s inflation target, a move that could eventually see the central bank raise rates from record-low levels.

Focus is also on the , where it is expected to maintain its benchmark rate. But markets will be watching for any potential changes to the bank’s tone.

China’s blue-chip index fell 1.3%, while the index fell 1.6% as rising COVID-19 infections in the country offset commitments from the government to shore up economic growth.

The country is facing an unprecedented spike in COVID-19 cases after it scaled back several lockdown measures earlier this month, which markets fear could delay a broader reopening in the country.

A survey also showed that was at its lowest level in nearly a decade, as the COVID-19 pandemic highlighted deepening cracks in the country’s economy.

Hong Kong’s index and the , which are both heavily exposed to Chinese markets, sank 0.6% each.

Broader Asian stocks fell after hawkish signals from several major central banks last week drove up concerns that rising interest rates and high inflation could trigger a recession in 2023.

Hawkish signals from the and the rattled markets which are already reeling from a sharp increase in borrowing costs this year. While both central banks signaled rates will rise at a slower pace, they are likely to peak at higher-than-expected levels.

South Korea’s index fell slightly lesser than its peers, losing about 0.4% after the government signaled that an economic slump in the country will likely bottom out by mid-2023. This, coupled with an eventual recovery in China, could see the east Asian economy recover sharply by 2024.

Indian stocks bucked the trend, as investors bought into markets reeling from two consecutive weeks of losses. The and indexes added about 0.5% each.

A strong economic growth outlook for India buoyed the country’s stock market this year, with two benchmark indexes hitting record highs in November.