Asian FX, stocks tumble on bets of more U.S. rate hikes

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Most Asian currencies weakened

against dollar on Monday, as strong U.S. jobs data raised the

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chances of further Federal Reserve interest rate hikes, casting

a cloud on global growth.

Unemployment in September fell further, data from the U.S.

showed, which points to a tight labor market, while job growth

slowed moderately.

“A surprising drop in the unemployment rate and another

solid wage growth have boosted market expectations for a fourth

75bp rise at the November 1-2 FOMC (Federal Open Market

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Committee) meeting,” said Gao Qi, a currency strategist at

Scotiabank.

The Thai baht, which he said was a “high-beta” currency,

tumbled 1.4% to trade at 37.9 to the dollar. The Indonesian

rupiah fell 0.3%, and the Singapore dollar

weakened 0.1%.

The greeenback further strengthened after the jobs data,

with the dollar index rising 0.5% late on Friday, and

adding another 0.1% Monday. The index was last seen at 112.861.

However, the Philippine peso held up against the

strong dollar, rising 0.1%, supported by the central bank

governor’s statements late on Friday, when he said the Bangko

Sentral ng Pilipinas was active in the forex market and selling

strategically.

Malaysia’s prime minister said the parliament was dissolved,

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with the dates of a snap election yet to be decided. The ringgit

did not trade on account of a public holiday.

The prospect of further U.S. rate hikes also sent the

country’s benchmark yield 6.1 basis points (bps)

higher to 3.885% on Friday. Asian yields followed suit, with

Indonesia’s 10-year bond yield up 4.6 bps at 7.288%,

while the Singaporean yield pushing 4.7 bps higher

to 3.457%.

Meanwhile, all major Asian stock markets traded in the red,

with China leading losses, after shedding 1.7%. Markets

in the Philippines also tumbled 1.7%, while those in

Singapore fell 1.3%.

“Returns from safe assets keep rising, making it harder for

equities to maintain their attractiveness,” analysts at DBS

said.

Chinese technology stocks fell sharply after U.S. President

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Joe Biden’s administration published a sweeping set of export

controls on Friday, including a measure to cut China off from

certain semiconductor chips made anywhere in the world with U.S.

equipment.

Markets in China reopened after a weeklong holiday, with

China’s onshore yuan trading about 0.1% higher.

Data showed China’s services activity shrank in September

due to COVID-19 restrictions, the first contraction in four

months.

The Indian rupee hit a record low of 82.6825 to the

dollar before cutting losses after the central bank stepped in

and sold dollars, sources told Reuters. The rupee last traded at

82.39 to the dollar.

Markets in Malaysia, South Korea and Taiwan did not trade on

account of public holidays. Japan’s stock market was closed, but

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the yen traded.

HIGHLIGHTS:

** Malaysia on Friday warned of an economic slowdown while

unveiling a smaller budget for the upcoming year

** India fuel demand slips to 10-month low in September

Asia stock indexes and currencies at

0711 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % DAILY YTD %

% %

Japan +0.05 -20.78 – -5.82

China +0.08 -10.68 -1.69 -18.31

India -0.08 -9.77 -0.63 -0.86

Indonesia -0.39 -6.92 -0.68 6.04

Philippines +0.07 -13.57 -1.68 -18.11

Singapore -0.13 -5.98 -1.17 -0.47

Thailand -1.33 -11.81 -0.96 -5.61

(Reporting by Harshita Swaminathan, Additional reporting by

Jaskiran Singh)

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