Asian stocks slump as 'Fear Factor' pushes investors to safe haven assets
asian stock markets fell sharply on Tuesday after banking and financial stocks were hit by steep decline globally. While Japanese Nikkei 225 dropped by 4.48 per cent, Australia's S&P/ASX 200 saw a free fall of 2.6 per cent.
The jump in the yen piled further pressure on Japan's Nikkei <.n225> which sank 3.4 percent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8 percent, and would have been lower if not for holidays in many centers, Reuters reported.
After a lustreless 2015, this year has started with continued pain in the stock market. Concern over the stability of the banking stocks has pushed the investors to venture into safe haven assets.
"The 'fear factor' in markets has morphed from being about an emerging market hard-landing and collapsing oil prices to being about the extent of the slowdown in the developed world and the ability of central banks to reflate asset values yet again," said analysts at Citi in a note.
The Bank of Japan's recent shift to negative rates has fuelled concerns that ever-more exotic monetary policy is rapidly reaching the point of diminishing returns.
Yet murmurings about the risk of recession in the United Sates has also led investors to wager the Federal Reserve will have to slow, or suspend altogether, plans to normalize rates.
Futures markets have priced out any chance of a hike in March and imply a funds rate of just 0.45 per cent by December . The current effective funds rate is 0.38 percent.
With more and more sovereign bonds paying negative rates, the relative cost of holding gold has seemed less and less of a burden. The yellow metal reached its strongest since June at $1,200.60 an ounce, to last trade at $1,188.
Oil initially took a hit on worries U.S. crude stockpiles had reached new peaks, even as a Saudi-Venezuela meeting to pare supplies showed little progress. Brent futures lost 85 cents on Monday to end at $33.21.
Early Tuesday, U.S. crude had recovered some ground to be up 49 cents at $30.18.
After a lustreless 2015, this year has started with continued pain in the stock market. Concern over the stability of the banking stocks has pushed the investors to venture into safe haven assets.
"The 'fear factor' in markets has morphed from being about an emerging market hard-landing and collapsing oil prices to being about the extent of the slowdown in the developed world and the ability of central banks to reflate asset values yet again," said analysts at Citi in a note.
The Bank of Japan's recent shift to negative rates has fuelled concerns that ever-more exotic monetary policy is rapidly reaching the point of diminishing returns.
Yet murmurings about the risk of recession in the United Sates has also led investors to wager the Federal Reserve will have to slow, or suspend altogether, plans to normalize rates.
Futures markets have priced out any chance of a hike in March and imply a funds rate of just 0.45 per cent by December . The current effective funds rate is 0.38 percent.
With more and more sovereign bonds paying negative rates, the relative cost of holding gold has seemed less and less of a burden. The yellow metal reached its strongest since June at $1,200.60 an ounce, to last trade at $1,188.
Oil initially took a hit on worries U.S. crude stockpiles had reached new peaks, even as a Saudi-Venezuela meeting to pare supplies showed little progress. Brent futures lost 85 cents on Monday to end at $33.21.
Early Tuesday, U.S. crude had recovered some ground to be up 49 cents at $30.18.
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