The momentum of the equity market rebound yesterday failed to continue with concerns that aggressive interest rate hikes by the Federal Reserve (Fed) in curbing inflation could affect the United States (US) economy.
It is understood that the latest situation forces investors to reassess the risk of deterioration in the global currency and debt markets.
The streak saw Wall Street's S&P 500 fall 2.1% to a new low of 3,640.47 while the Nasdaq Composite fell 2.84% to a 2022 low of 10,737.51 and the Dow Jones Industrial dropped 1.54% to 29,225.61.
Also causing the fall in equities was the continuation of the sale of US Treasury yields after the Fed did not give an indication of slowing rate increases to curb inflation.
The US 10-year Treasury yield was at 3.789% at the close of trading.
Comment Phil Blancato from Ladenburg Thalmann Asset Management, the selling of equity is because the main fear of the market is now focused on the actions of the Fed which will lead to a recession including a decrease in income.
However, the good news is that the US gross domestic product (GDP) in the 2nd quarter was unchanged and unemployment claims also decreased.
Moving to the Asian region, Japan's Nikkei 225 slipped 1.32% while the Topix fell 0.87% and Australia's S&P/ASX 200 lost 0.48%.
South Korea's Kospi index fell 1% and the Kosdaq shed 1.13% while MSCI's broad gauge of Asia Pacific shares outside Japan fell 0.15%.
ANZ Research analysts explained in their note, the geopolitical crisis and inflationary pressures have reduced interest in risky assets when expectations for weak growth include high funding costs.
