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Asian shares retreat after Jay Powell says rate rise expected soon

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Chinese technology stocks suffered a sharp sell-off as markets across the Asia-Pacific region followed declines on Wall Street after the chair of the Federal Reserve refused to rule out future interest rate rises.

Shares in Hong Kong-listed Alibaba, Jack Ma’s ecommerce group, opened 5.5 per cent lower on Thursday, while shares of food delivery giant Meituan were down almost 3.9 per cent. Chinese video sharing site Bilibili shed more than 10 per cent to hit a record low.

European equities were set for a negative open despite enjoying solid gains the day before. Euro Stoxx 50 futures were down 2.8 per cent while FTSE 100 futures were 1.8 per cent lower.

That sentiment was reflected across the Atlantic, with US equities pointing to further declines as futures for the benchmark S&P 500 fell 1.3 per cent.

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The Hang Seng Tech index, representing the 30 biggest tech companies listed in Hong Kong, fell 3.5 per cent.

The slump registered across Asian markets, with drops in Japan’s Topix of 2 per cent and Hong Kong’s wider Hang Seng index of 2.1 per cent. Australia’s S&P/ASX 200 lost as much as 2.3 per cent, marking a decline of almost 10 per cent from its August peak.

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China’s CSI 300 index of large Shanghai- and Shenzhen-listed stocks declined 1.4 per cent before regaining ground, but remained in the red.

South Korea’s technology-heavy Kospi lost as much as 2.6 per cent after a strong debut by LG Energy Solutions reduced liquidity from other shares and Samsung Electric missed fourth-quarter estimates despite strong earnings.

Paul Choi, head of equity research at CLSA, told the Financial Times that expectations of interest rate rises from the Fed had damped market sentiment in South Korea as foreigners cash out of shares.

“Secondly, there were a lot of IPOs and issuance in new shares absorb liquidity, which is negative for existing shares,” said Choi.

Global markets have been volatile in recent weeks as traders prepared for the Fed’s tightening of monetary policy, with speculative tech stocks hit particularly hard.

The US central bank indicated on Wednesday that it would begin raising interest rates at its next policy meeting in March. Chair Jay Powell refused to rule out consecutive rate increases later in the year.

Powell said raising rates “soon” would be appropriate, adding that the bank needed to be “nimble.”

Increasing uncertainty over tensions between Russia and Ukraine contributed to a rise in oil prices, which hovered around multiyear highs.

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