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Asian stocks dropped in the wake of another plunge on Wall Street as the prospect of higher interest rates and turmoil in Europe stoked fears of global recession.
An index of the region’s equities headed for its seventh straight weekly loss, the longest losing streak since 2015.
US futures fluctuated after the S&P 500 slid more than 2 percent to the lowest in almost two years.
The dollar swung between gains and losses versus major currencies including the pound as investors weighed risks emanating from the debt crisis gripping the UK.
Treasury yields were little changed after days of being whipsawed.
The Cboe Volatility Index has been well over 30 for almost all of this week, reflecting heightened worry among equity investors.
Another group of Federal Reserve officials struck a hawkish tone, German inflation topped 10 percent and the UK government’s tax plan continued to weigh on market sentiment.
The Bank of Japan boosted its planned bond purchases at a regular operation on Friday as it sought to cap upward pressure on yields, while Prime Minister Fumio Kishida instructed his government to come up with an economic stimulus package by the end of October.
The offshore yuan weakened and was at risk of further depreciation next week, when China goes on a one-week holiday, leaving Beijing unable to guide investor expectations with its daily reference rate.
“Our assumption is that the Chinese government will continue to fight this administratively as long as they can before they have to step in with direct intervention and have to start selling down US reserves,” Charlene Chu, senior analyst for Autonomous Research, said on Bloomberg Television.
Amid the economic pressure, China’s central government shifted to allow some cities to lower their mortgage rates for first home purchases in its latest bid to help the country’s struggling housing market. – Bloomberg
Online Reporter