CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Asian market erased all the gains this year as Powell confirmed March rate hike

Although the narrative of four rate hikes in a year has been fermenting since the start of 2022, the speech by Powell doused any remaining hope.

Hang Seng Source: Bloomberg

One of the most discussed questions of 2022 finally got an answer. In the first FOMC meeting of the year, Jerome Powell said that the Fed is ready to raise rates in two months and shrink its bond holdings as the inflation proves to be the hottest in a generation. The chair also declined to rule out quantitative tightening and warned there's a risk of a prolonged period of surging prices.

Although the narrative of four rate hikes in a year with up to 50 bps for the first time has been fermenting since the start of the new year, the speech by Powell doused any remaining hope.

What’s Quantitative Tightening (QT)

Quantitative tightening is a contraction monetary policy applied by a central bank to decrease the amount of liquidity within the economy. In other words, the policy is the reverse of quantitative easing, aimed to increase money supply in order to "stimulate" the economy.

Since the pandemic commenced in early 2020, nearly all the global central banks are applying quantitative easing monetary policy to prevent the economic recession, which is also believed to be the key drive underlying the booming of the equity market for the past two years. S&P 500, for example, has grown by 91.6% from April 2020 to Dec 2021.

As a result, the introduction of quantitative tightening is unsurprisingly triggering the panic selloff across the equity market as the liquidity, viewed as the “petrol” for the equity market’s ongoing growth, will be negatively impacted.

Asian market fell unanimously on Thursday lead by Hang Seng Tech index dived by over 4%.

Hang Seng

  • Hang Seng dropped more than 2% today at the open
  • The index has walked sideway from its encouraging upward trajectory since early this year
  • Next support will be its 50-days moving average, around 23703, which if broken, will bring the price to 23474 and erased all the gain for this year.
  • 24700 will be the next test and key resistance should Hang Seng aiming to move back to its previous moving channel.

Hang Seng Tech

  • The four hours chart shows the index is falling below all the major moving averages.
  • A shape of “double head” has been clearly formed, suggesting the overturn of momentum should be in view.
  • Next support will be looking at the low from Jan 6th, which is also the floor level for Hang Seng Tech during the past 18 months.
  • Multiple layers of resistance for Hang Seng Tech include 20 and 100-days moving average and the bottom level between the “double head”, around 5600.

Taiwan Index

-Taiwan stock suffered the biggest drop since October 2021 and broken through the ascending moving band formed since then.

-The drop from the past two weeks has evaporated all the gains since early December.

-Currently supported at 17014, the low from Nov 27th. Next support will be eye on 16931.

-RSI reached its lowest level since Oct 6th.

Take your position on over 16,000 local and international shares via CFDs and trade it all seamlessly from the one account. Learn more about trading share CFDs with us, or open an account to get started today.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.