Stocks in Japan, South Korea and Australia down 2% after Powell speech

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A pedestrian looks at stock prices of Japanese companies on the Tokyo Stock Exchange displayed on an electronic board in Tokyo on April 30, 2021.

Yuki Iwamura | AFP | Getty Images

Stocks in the Asia-Pacific region traded lower on Monday after Fed Chairman Jerome Powell’s speech in Jackson Hole on Friday. He warned that rising interest rates will cause “some pain” for the US economy, saying higher interest rates are likely to persist “for some time”.

The Nikkei 225 in Japan slipped 2.66% to 27,878.96 and the Topix index fell 1.79% to 1,944.10. South Korea’s Kospi fell 2.18% to 2,426.89 and the Kosdaq index fell 2.81% to 779.89.

In Australia, the S&P/ASX 200 fell 1.95% to end the session at 6,965.50.

Mainland China’s Shanghai Composite rose 0.14% to 3,240.73 and the Shenzhen component lost 0.34% to 12,018.16.

Hong Kong’s Hang Seng Index was down 0.76% in the last hour of trading and the Hang Seng Tech Index was down 1.36%.

MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.9%, while the Japanese yen traded at 138.68 to the dollar.

On Friday in the United States, the Dow Jones Industrial Average plunged 1,008 points, or 3.03%, to 32,283.40. The S&P 500 fell 3.37% to 4,057.66 and the Nasdaq Composite fell 3.94% to 12,141.71.

“While higher interest rates, slower growth and looser labor market conditions will reduce inflation, they will also hurt households and businesses,” Powell said. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

He said the Fed’s decision in September “will depend on the totality of incoming data and how the outlook evolves.”

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