Asian markets tumble as investors expect US Fed officials to hint at September rate hike

All Asian stock market indices were trading lower on Monday (12 September), with the Shanghai Composite down 2.29% at 3,008.44 as of 6.18am GMT. This was amid investor expectations that the US Fed officials could hint at a September rate hike later in the day.

A minimum of three Fed officials are expected to speak today. One among them is board member Lael Brainard. "Market participants are wondering if maybe she (Brainard) is being wheeled out to give the market one last warning of a rate hike at next week's meeting….The thinking is that if someone as dovish as she is starts talking like a hawk, people will notice. Her speech will be closely examined," Marshall Gittler, head of research at broker FXPRIMUS, was quoted as saying by Reuters.

Traders were also said to be concerned that other central banks would become less accommodative. This follows a disappointing policy meeting of the European Central Bank (ECB) last week. On 8 September, the central bank kept interest rates steady as expected, but it surprised everyone by announcing that it would not extend the deadline of its bond-buying programme.

The rising risk sentiment is because "one, the ECB did not extend QE, provoking a sell-off in bond markets, which fed into the medium to long-end U.S. bond curve. Two, traders have convinced themselves the Fed are marching out Leal Brainard, a mega-dove, to bang the Fed's September rate hike drum," Stephen Innes, a senior trader at OANDA, was quoted as saying by CNBC.

Indices in the region were trading as follows at 6.56am GMT.

Among commodities, oil prices declined amid reports that oil drilling activity had increased in the United States. While WTI crude oil was trading lower by 1.85% at $45.03 (£33.92) a barrel, Brent crude was trading 1.71% lower at $47.19 a barrel as of 7.05am GMT.