Asia markets dive as volatility sweeps globe ahead of Fed meeting

HONG KONG (AFP): Asian markets plunged Tuesday following a highly volatile day on Wall Street fuelled by fears about the Federal Reserve’s plans to hike interest rates, with attention lasered on its upcoming two-day policy meeting.

Asia spent all Tuesday well in the red with Tokyo down 1.7% as Hong Kong shed 1.9%, while Singapore, Taipei and Jakarta were also off more than one%.

Sydney shed more than two% after higher-than-forecast Australian core inflation figures ramped up bets on a rate hike by the country’s central bank. Shanghai and Seoul fell more than two%, with Wellington, Mumbai and Bangkok also down.

A disappointing start to the corporate earnings season, as well as growing concern about Russia’s troop build-up on Ukraine’s border and warnings of a possible invasion were also dragging on sentiment.

After spending much of last year playing down the spike in prices, the US central bank has in recent months taken a sharp hawkish turn on monetary policy as officials look to bring inflation – which is at a four-decade high – under control.

Minutes from the most recent meeting indicate it will begin lifting interest rates from March with three or possibly four more hikes before the end of the year. On top of that, it plans to start offloading its vast bond holdings.

But while the move to battle runaway prices is seen as crucial, the end of the era of ultra-cheap cash for investors has rattled markets after almost two years of uninterrupted gains to record or multi-month highs.

All attention is on the Fed gathering that starts later in the day, with investors poring over every word from the bank’s statement and boss Jerome Powell’s subsequent news conference.