Asia falters as Russia-Ukraine crisis stokes inflation worries
Markets are bracing for the fallout from rising commodity prices, particularly higher inflation which could pressure the US Federal Reserve and other central banks to quickly tighten monetary policy, just as the world emerges from its pandemic slump
Manila, Bangkok stocks fall over 2%
S Korean won hits lowest since June 2020
Safe-haven Singapore bond yields tick down
Keep updated, follow The Business Standard's Google news channel
Emerging Asian markets were a sea of red on Monday, with the Philippines and Thailand particularly hit by heightening concerns about the impact of the Ukraine-Russia conflict on inflation and a global economic recovery.
Manila's share market slid 2.3% to a more than seven-week low, while the peso gave up 0.3%. Stock indexes in Japan and Taiwan each sank more than 3%, and Thai equities hit a five-week low.
Yields on Indonesia's benchmark bonds which have among the highest returns in the region, jumped 82 basis points to their highest in almost a year. Long-tenor bonds in Singapore, seen as a safe-haven bet, saw yields slip 38 basis points to 1.810%.
The jolt to regional assets was in tandem with volatile moves seen in global markets as oil prices sky-rocketed amid the risk the West banning Russian products as the military crisis in Ukraine, which Russia calls a "special operation", escalates.
Markets are bracing for the fallout from rising commodity prices, particularly higher inflation which could pressure the US Federal Reserve and other central banks to quickly tighten monetary policy, just as the world emerges from its pandemic slump.
"Elevated oil prices may pose a threat to firms' margins and consumer spending outlook, at a time where the Fed will face greater pressure of having to over-correct with quicker and larger rate hikes in light of inflationary pressures," Yeap Jun Rong, a market strategist at IG, said in a note.
Higher exposure to commodities helped limit losses in Indonesia, a net exporter of energy. The rupiah lost 0.2% while stocks gave up 0.7%.
In South Korea, the won eased more than 1% and the benchmark KOSPI stocks index tumbled as much as 2.5%.
The country's foreign exchange authority has been selling US dollars on Monday to limit a decline in the won after a warning that it was monitoring speculative movement in the offshore market.
"For the Korean market, the FX intervention will just absorb the market volatility so the KRW could still be weakened further in line with Asia FX," said Poon Panichpibool, markets strategist at Krung Thai Bank.
"It's just that the overall volatility of KRW will be somewhat lowered."
