In selloffs caused by inflation and COVID concerns, stocks are good for two weeks

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In selloffs caused by inflation and COVID concerns, stocks are good for two weeks

Hong Kong stocks dropped 3.2%, while China shares shed 1.2%. Asian markets also reacted to red-hot consumer price data from the United States, which fuelled concerns of an increasingly aggressive stance by the Federal Reserve.

“Markets have set off on another rocky ride over inflation fears, following a stronger jump in (the) U.S. consumer price index that was greater than even analysts’ higher estimates,” said Steve Clayton, fund manager at Hargreaves Lansdown.

Currencies in the developing world also took a hit against a strengthening dollar, with South Africa’s rand down 1.2%. The currency touched its lowest in nearly four weeks.

“Investors are now fretting that the economic data will force the U.S. Federal Reserve’s hand into pushing interest rates up, further and faster than previously forecast.”

Story Highlights

  • Beijing is suffering an “explosive” COVID-19 outbreak connected to a bar, a government spokesman said on Saturday. Shanghai, meanwhile, has conducted mass testing to contain a jump in cases tied to a hair salon.

  • The figures also dashed hopes of inflation having peaked in the United States. The Fed is now expected to lift its lending rate by at least half a percentage point at the end of its two-day meeting on Wednesday.

India’s rupee hit a record low of 78.28 per dollar, while bond yields spiked to their highest levels in more than three years. Turkey’s lira fell to 17.27 per dollar at one point in the day.

Data showed Turkish industrial production had grown 10.8% year-on-year in April, faster than a Reuters poll forecast of 8% and rising for a 22nd consecutive month. Production is holding firm against a background of lira weakness and rampant inflation