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-Markets fell in Asia on Tuesday and the yen rallied after Japan announced a surprise tweak to its ultra-loose monetary policy, just as traders were fretting that central bank efforts to tame inflation will tip economies into recession.
Sentiment was also being weighed down by a spike in Covid infections in China as officials roll back many of the strict containment measures that have been in place for almost three years.
A so-called Santa rally appears to be eluding investors, with the mood dampened by last week’s warnings from the Federal Reserve and European Central Bank that they will likely push interest rates higher than expected next year.
The remarks dealt a blow to a short rally across equities that had been fuelled by data showing inflation coming down.
Adding to the selling pressure were comments from former New York Fed chief William Dudley, who told Bloomberg Television that any sign of optimism in markets could make monetary policymakers tighten even more.
Tokyo sank more than two percent after the Bank of Japan adjusted its parameters for controlling bond yields, in a shift away from its long-running dovish stance of keeping rates ultra-low to boost the struggling economy.
