equities in asia face further headwinds and the yen may find fresh support as investors look beyond the federal reserve’s wednesday interestrate increase to what may be peak of its tightening cycle according to strategists and fund managers the us central bank hiked its benchmark by a quarter percentage point as economists forecast and hinted it may be the final move in tightening campaign as economic risks mount news late wednesday in the us that pacwest bancorp was considering a potential sale sent its shares plummeting in afterhours trade reigniting us banking worries and weighing on risk sentiment “markets will be softer today with no soothing or calming words by powell the market was looking for some certainty but it wasn’t forthcoming the regional bank slow train crash continues so that is overhanging the market post fed press conference” “markets went riskoff as the stress continues with pacwest the next likely bank to need rescuing post raising the white flag” the us banking crisis is “systemic now versus idiosyncratic as first thought” he said jayati bharadwaj fx and emerging market macro strategist at barclays in new york “if this indeed turns out to be the last rate hike in this cycle it should be positive for asian equities in our view interestrates hikes were a major headwind for asian equity last year this year we are seeing signs that interest rate hikes could end in asia with south korea and indonesia having paused interest rate hikes recently” brendan mckenna emerging market strategist at wells fargo in new york “i tend to lean toward the idea the fed is on pause now in that sense em asia assets can do well fx should do well and yields across em can come down as regional central banks may not feel the pressure to keep tightening” “em asia can continue to underperform relative to the rest of the em complex but i do think upside exists for most of asia real rates in asia are not as elevated compared to latam and most of emea while the china recovery may be starting to lose a bit of steam as well” “we still like the high beta countries so in that sense idr krw and php” he said referring to the currencies of indonesia south korea and the philippines vassili serebriakov fx and macro strategist at ubs in new york “jpy seems to be the biggest winner with usdjpy dropping along with us frontend yields” ubs anticipates the yen to strengthen to 120 per dollar by yearend he said “the market will be looking for signs that credit tightening is starting to impact activity and labor market data and since the fed hinted at a pause today any weakness in the data would reinforce the view that the tightening cycle is over” rodrigo catril strategist at national australia bank ltd in sydney brad bechtel currency strategist at jefferies in new york “with the fed at or near the end of its tightening cycle we are likely to see idiosyncratic drivers take over for currencies with the usd stepping back as your daily driver of fx moves within the asian region it’s going to be hard for the funders like jpy and twd to rally unless there is a material uptick in inflation or growth for either one” “south korea seems to be on the right path but global growth uncertainty will still weigh on the currency those with higher carry like the php or idr might attract more attention from the carry growth and idiosyncratic drivers like tourism growth might help the likes of thb” he said