Asia Stocks, Currencies Fall on Fed Rate Cut Odds – Asia Market Wrap

Asian equities and currencies fell following a Wall Street selloff triggered by activity data indicating that the Federal Reserve may leave interest rates unchanged for the most of this year.

MSCI’s Asia Pacific Index was on track for its worst day since May 8, and its first fall in five weeks, as shares in Hong Kong, mainland China, Japan, and Australia plummeted. A barometer of Chinese stocks in Hong Kong was on track for its lowest week since January. US futures edged up after the S&P 500 plummeted the most this month on Thursday.

Swaps now completely price the Fed’s first full quarter-point rate decrease in December, compared to November a day earlier. Service provider activity increased at the quickest rate in a year, but industrial output rose more quickly. Such resilience makes it harder for inflation to decrease, which explains why the Fed is likely to keep interest rates higher for longer.

Emerging Asian currencies, such as the South Korean won, Malaysian ringgit, and Thai baht, declined due to a stronger dollar. The dollar extended its winning streak versus Group of 10 peers to five days, the longest since April.