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Fed's hawkish stance triggers global selloff
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MSCI emerging Asia and ex-Japan indexes dropped 1.3%
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Malaysia's ringgit snaps eight-day winning rally
By Shivangi Lahiri
Nov 14 (Reuters) - Emerging Asian equities slipped on Friday, with Singapore stocks tumbling from record highs, as hawkish U.S. Federal Reserve comments sparked a global selloff and dimmed hopes of a rate cut next month.
The MSCI index of emerging Asia equities and a broader index tracking Asian equities outside Japan fell 1.3% each, while the MSCI ASEAN equity index was down 0.4%.
A growing number of Fed policymakers are turning cautious about more rate cuts, citing stubborn inflation and signs that the labour market remains relatively stable even after two U.S. rate reductions this year.
Markets have priced in a nearly 50% chance of a hold in interest rates at the Fed meeting in December.
"The moves set up global markets for a bearish end to the week, where thoroughly risk-off sentiment is likely to see risk assets everywhere come under pressure," said Kyle Rodda, senior financial market analyst at Capital.com.
"There's uncertainty, perhaps a strategic ambiguity, when it comes to future Federal Reserve policy, with the markets pricing higher odds that the central bank could leave rates unchanged entirely in December."
Singapore's FTSE Straits Times index fell 1%, pulling back from its record high of 4,575.91 points it hit on Thursday, although it was hovering just a few pips away from the peak.
Stocks in Seoul fell as much as 3.3%, snapping a four-day winning rally, while equities in Taiwan fell around 1.7%, on track for their second session of losses.
The AI rally, of which South Korea and Taiwan have been key beneficiaries, has also lost its momentum amid fears about rich valuations, with "risk potential returns on investment too low to justify them", Kyle added.
In Malaysia, the ringgit slid 0.1% to snap an eight-day gaining streak, while equities dipped 0.3%.
The country's central bank said the economy expanded at its fastest pace in a year in the third quarter, with growth in 2025 poised to come in at the upper end of its forecast.
Currencies elsewhere in the region were mostly muted, with Indonesia's rupiah gaining 0.2% to end a three-day losing streak, while the Singapore dollar and the Philippine peso both rose 0.1% each.
Investors now await a flurry of economic data next week, including Bank Indonesia's policy rate decision and Thailand's third-quarter economic growth data.
HIGHLIGHTS:
** US, South Korea release details of deal including Korean investment in shipbuilding
** China's October new home prices fall at fastest pace in a year
** IMF sees Thai GDP growth at 1.6% in 2026
** US State Dept approves possible sale to Taiwan of fighter jet spare and repair parts
Asia stock indexes and currencies at 0503 GMT
COUNTRY FX RIC FX DAILY FX YTD INDEX STOCKS STOCKS
% % DAILY YTD %
%
Japan +0.10 +1.80 -1.74 28.19
China India -0.07 -3.51 -0.33 9.09
Indones +0.15 -3.62 0.15 18.43
ia
Malaysi -0.10 +8.18 -0.32 -0.93
a
Philipp +0.13 -1.24 0.23 -12.08
ines
S.Korea Singapo +0.08 +5.08 -0.96 19.65
re
Taiwan -0.13 +5.33 -1.70 19.08
Thailan +0.05 +6.13 -1.24 -9.19
d
(Reporting by Shivangi Lahiri in Bengaluru)
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