New Zealand Central Bank hikes Interest by 50 bps, Asian Stocks Dropping

On Wednesday, Asian stocks fell to a 47-day low as rising interest rate expectations and geopolitical tensions weighed on risky assets.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.02 percent, reaching a low not seen since January 6.

Following a Tuesday purchasing managers' index report showing the factory sector had contracted, Japan's Nikkei fell 1.32 percent, its worst performance in about a month.

The Bank of Japan (BOJ) announced on Wednesday that it would conduct emergency bond purchases in order to contain rising yields, as 10-year Japanese government bonds hit 0.505 percent for the second straight session, breaking through the BOJ's 0.5 percent cap and reaching their highest level since January 18.

The Reserve Bank of New Zealand raised interest rates by 50 basis points to a more than 14-year high of 4.75 percent. The central bank stated that it expects to continue tightening to ensure that inflation returns to its target range in the medium term.

On Tuesday, Wall Street had its worst day of the year, with an unexpectedly strong reading from S&P Global's composite PMI indicating that the US economy was not yet cooling.

"It concerns the market that central banks will have to hike rates a lot more to curb inflation," said Kerry Craig, JPMorgan Asset Management's global market strategist.

"I think the greater concern at the moment is around the earnings outlook and how much that is really going to fall from here ... against the uncertainty around the probability of a recession in the U.S."

Russian President Vladimir Putin delivered a warning to the West over Ukraine by suspending its last major nuclear arms control treaty with the United States. U.S. Secretary of State said Putin's move was "deeply unfortunate and irresponsible".

"This (nuclear pact suspension) has spurred the next leg of escalation concerns, invoking a response from President Biden in Poland saying that Russia will never win the war and pledging more support to Ukraine," Saxo Markets APAC strategy team said in client note. "The focus is now on China which needs to back up its peace treaty words with action after being accused of supplying arms to Russia."

China's benchmark fell 0.68 percent, while Hong Kong's Hang Seng index fell 0.09 percent.

The S&P/ASX 200 index in Australia fell 0.3% on Wednesday, falling for the second straight session and reaching its lowest level in more than a month on expectations of interest rate hikes.

The S&P 500 e-mini futures rose 0.16 percent.

The yield on 10-year US Treasury notes reached 3.966 percent, the highest since November, before falling to 3.948 percent on Wednesday.

The dollar index was flat, but analysts expect interest rate hikes to strengthen the dollar, weighing on emerging market equities, which benefited from a falling dollar.

US crude fell 0.46 percent to $76.01 per barrel, while Brent fell 0.37 percent to $82.74.

Spot gold added 0.1 per cent to reach $1,835.28 an ounce.