Global rout in stocks abates in Asian trading

The torrid sell-off that swept through global stock markets this week showed signed signs of abating in Asia on Friday after a bruising string of losses for investors spurred by worries over rising interest rates.

Wall Street suffered another heavy fall on Thursday, extending its losing streak to five sessions — a run blamed by Donald Trump on an “out of control” US Federal Reserve.

The S&P 500 index tumbled 2.1 per cent, leaving the US benchmark down 5 per cent over the week. The global FTSE All-World index retreated for a sixth day running, leaving all of 2018’s gains erased and on track for one of the worst weeks of the year.

The selling continued into the Asian day but at more muted levels. In Tokyo, shares were down 0.5 per cent by midday after a 3.5 per cent drop in the previous session. Hong Kong shares were up 0.4 per cent in early trading while shares in Taiwan, one of the markets hit hardest this week, rallied 0.7 per cent.

Early futures trading also indicated a more positive open for equities in London and New York, with the FTSE 100 set to open flat and the S&P 500 expected to rise 0.6 per cent.

The sharp equity sell-off comes after a bout of turbulence in the US Treasury market driven by strong economic data and a more hawkish Federal Reserve The yield on the 10-year benchmark, which moves inversely to price, hit a seven-year high of 3.26 per cent earlier this week.

Mr Trump stepped up his criticism over tightening Fed monetary policy in an Oval Office meeting where he said he was “disappointed” in Jay Powell, the central bank chairman, but said he was not thinking of removing him.

“We have interest rates going up at a clip that’s much faster than certainly a lot of people, including myself, would have anticipated. I think the Fed is out of control,” he said.

Mr Trump added: “I’d like our Fed not to be so aggressive because I think they’re making a big mistake,” he said. That followed similar comments on Wednesday, when he said “the Fed has gone crazy”.

Manishi Raychaudhuri, head of equity research in Asia Pacific at BNP Paribas, said the equity sell-off has been “particularly pronounced” in Asia, in part because of the trade war between the US and China, which shows little sign of easing.

“Some of the current account deficit countries have suffered more,” he added, pointing to India and Indonesia, both of which are large oil importers.

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