Asian/EM stocks drop on strong dollar and prospects of higher US rates

Stock markets across Asia, particularly the ones with the current account deficit concerns are finally showing signs of stress on prospects of higher US rates and strong US dollar.

At the time of writing, Australia’s S&P SAX 200 was trading flat to negative. Japan’s Nikkei index was up 1.22% on Yen weakness.

South Korea’s Kospi lost 0.5%, while Indonesia’s IDX composite dropped 0.8%. Hong Kong’s Hang Seng shed 0.35% as well.

The talk of a steeper Fed rate hike path in 2017 is gathering steam on the back of a strong US data and expectations of a major fiscal stimulus effort during the Trump Presidency.

Prospects of higher US rates and a strong US dollar make matters worse for energy dependent/consumption driven economies.