(Updated)

Asia currencies, stocks drop as weak US data fans recession fears

Asia currencies, stocks drop as weak US data fans recession fears
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(June 29): Asian currencies and stocks fell on Wednesday, as weak economic data from the United States dented risk sentiment and overshadowed optimism around the easing of some Covid-19 restrictions in China.

The Indian rupee was pushed down as much as 0.3% to a fresh record low of 78.97 to the US dollar, with traders expecting the central bank to intervene and cushion the fall.

The Philippine peso and Indonesian rupiah also lost 0.3% and 0.1% respectively.

Fears of a recession gripped markets after data showed US consumer confidence hit a 16-month low in June, with households worrying about high inflation.

South Korea's consumer confidence also showed pessimism, leading the country's main stock index 1.8% lower to be the worst performer in the region, while the won tumbled 1.2%.

During late Tuesday trading hours, China announced it would now require inbound travellers to quarantine at a centralised facility for only seven days, instead of the previous 14.

"It's clearly still a very gradual step, when you compare to other countries, where (quarantine) measures have been completely lifted, China still has some way to go to get there," said Mitul Kotecha, head of EM strategy at TD Securities.

China's yuan and Thailand's baht extended gains to early Wednesday hours and rose as much as 0.2% and 0.4% respectively, but gave up most of those gains by the latter half of the trading day to trade flat.

"It implies a path towards allowing more Chinese tourists, for example, into Thailand, which is a great source of tourism revenue for the country. But more broadly, it doesn't have big implications for the region," Kotecha said.

Thailand's prime minister also said a weak baht would boost exports while its fiscal and financial positions remain strong.

The World Bank maintained its GDP growth forecast for Thailand at 2.9% for the year, while the finance minister on Tuesday set the figure at 3.5%.

"People will focus on the outlook from the Bank of Thailand as it could signal how far and how fast the BOT could hike rate," said Poon Panichpibool, a markets strategist at Krungthai Bank, adding that any figure around 3% is along expectations.

Chinese stocks also lost 1.4%, while stocks in Thailand and the Philippines shed 0.5% and 0.7% respectively.

Highlights:

  • China factory activity likely expanded for the first time in four months in June, according to a Reuters poll
  • Indonesia 10-year benchmark yield climb for the first time in six days, up 0.9 basis points at 7.301%