*
Stocks in Bangkok, Singapore and Seoul down 0.6%-0.9%
*
Markets await U.S. interest rate decision
*
Asian currencies gain, S.Korean won up 0.3%
By Harish Sridharan May 3 (Reuters) - Malaysia's ringgit extended gains after its central bank hiked interest rates in a surprise move on Wednesday, while stocks across Asia declined ahead of the U.S. Federal Reserve's monetary policy decision. The ringgit - down over 1% this year and among the worst performing currencies in the region - appreciated to 4.4480 per U.S. dollar following a 25 basis-point hike by Bank Negara Malaysia. The currency was last up 0.3%. Contrary to widespread expectation that the central bank would stand pat for a third straight policy meeting, it raised the benchmark interest rate to 3.00%, citing a need to normalise the degree of monetary accommodation amid strong growth prospects and persistent inflation. "We think the central bank is too optimistic about the prospects for the economy, with weaker global demand and the impact of past monetary tightening set to weigh heavily on growth," economists at Capital Economics wrote in a note.
"We also think the central bank is overestimating the risks from inflation".
Shares in Kuala Lumpur were down 0.4%, while the yield on Malaysia's 10-year benchmark note slipped to 3.844%. Meanwhile, equities in Jakarta , Seoul and Bangkok fell 0.4% to 1.1%. Markets in China and Japan were closed for holidays. "We are seeing some spillover in Asia from overnight losses on Wall Street as U.S. banking contagion risks linger," said Christopher Wong, currency strategist at OCBC.
Major U.S. stock indexes fell overnight on renewed fears over the financial system. The United States has seen three mid-sized bank failures so far this year, with First Republic Bank's assets seized by regulators and sold to JPMorgan late on Monday. Late on Wednesday, the Fed is expected to deliver a 25 bp hike while investors watch out for signals of a pause.
Back in Asia, Thailand's headline inflation dropped to its lowest in 16 months in April, coming in closer to expectations owing to lower energy and food prices and a high base in 2022. Shares in Bangkok were down 1.4%, their biggest single-day drop in nearly a month.
Currencies in Asia marginally appreciated against the dollar. The Taiwanese dollar , Philippine peso and Indonesian rupiah were up 0.1% each. The South Korean won was up 0.3%.
HIGHLIGHTS
** Thai headline CPI up 2.67% y/y in April, slowest pace in
16 months
** Singapore's Keppel revamps, aims to manage $150 bln of
assets by 2030
** Indonesia economy likely grew 4.95% on year in Q1,
contracted vs quarter - Reuters Poll
Asia stock indexes and currencies at 0840 GMT
COUNTRY FX RIC FX FX INDEX STOCK STOCK
DAILY YTD % S S YTD
% DAILY %
%
Japan +0.51 -3.48 - 11.74
China - -0.26 - 7.58
India +0.05 +1.08 -0.36 -0.13
Indonesia +0.14 +6.03 -1.03 -0.84
Malaysia +0.27 -1.12 -0.39 -5.02
Philippines +0.12 +0.62 -0.99 0.61
S.Korea +0.29 -5.51 -0.91 11.85
Singapore +0.16 +0.56 -0.80 0.14
Taiwan +0.11 -0.13 -0.53 10.01
Thailand +0.04 +1.59 -0.56 -8.92
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: World FX rates Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Harish Sridharan in Bengaluru; Editing by Dhanya Ann Thoppil)
