Il Nuovo Postiglione - Asian traders resume selling as another jumbo Fed hike looms

Equities around the world have been clattered by fears of a recession in major economies as central banks ramp up borrowing costs to combat the highest inflation in decades, which has been compounded by the Ukraine war and supply chain snarls.

Adding to the dour mood, four regions in Russian-held parts of Ukraine said they will hold weekend referendums on annexation by Moscow -- a move that risks escalating the conflict as President Vladimir Putin could claim an attack in those regions was an attack on Russia.

But for now all eyes are on Washington, where the Fed is due to conclude its latest policy meeting, with most analysts predicting it will announce another 75 basis-point lift though some have tipped a full percentage-point move.

However, while the hike has largely been priced into the markets, the US central bank's forecast and post-meeting comments from boss Jerome Powell are the main attraction for investors.

"Volumes remain light and the mood cautious, with few looking to take on large positions before hearing what the Fed says and where policy makers see rates going by the end of the hiking cycle," Fiona Cincotta, at City Index, said.

"This is what will drive the markets, not the rate hike... but what the Fed plans to do next."

Fed officials have for months stuck to the mantra that they will only ease up on their hawkish drive when inflation comes down and remains subdued.

This has led many to warn that rates are unlikely to come down anytime soon, possibly as late as 2024, with a recession more than likely in the United States as well as other major economies.

- 'Long and ugly' recession? -

Other central banks are also meeting this week.

On Tuesday, officials in Sweden surprised markets by unveiling a one percentage-point hike, while the United Kingdom and Switzerland are expected to announce more increases.

While there is debate on how bad any contraction will be, Nouriel Roubini, who predicted the 2008 economic meltdown, said he saw a "long and ugly" recession by the end of the year that would not likely end until the end of 2023 with severe consequences for equities.

"Even in a plain vanilla recession, the S&P 500 can fall by 30 percent," he said, adding that "a real hard landing", which he has forecast, could see it give up 40 percent.

In early trade, Asian markets were back in the red, reversing Tuesday's rate bounce.

Tokyo, Hong Kong, Sydney and Manila were all down more than one percent, while there were also losses in Shanghai, Seoul, Wellington, Taipei and Jakarta.

Part of the reason for the weakness is the sharp slowdown in China, which has been battered by a series of Covid-linked lockdowns this year that have seen tens of millions of people shut away and factories close down for months.

In light of that -- as well as the Ukraine war and rate hikes -- the Asian Development Bank on Wednesday cut its 2022 growth forecast for developing Asia and warned of "global headwinds" to the recovery.

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: DOWN 1.4 percent at 27,308.66 (break)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 18,515.54

Shanghai - Composite: DOWN 0.4 percent at 3,110.55

Euro/dollar: DOWN at $0.9969 from $0.9977 on Tuesday

Dollar/yen: DOWN at 143.64 yen from 143.72 yen

Pound/dollar: DOWN at $1.1380 from $1.1384

Euro/pound: DOWN at 87.60 pence from 87.63 pence

West Texas Intermediate: DOWN 0.1 percent at $83.85 per barrel

Brent North Sea crude: FLAT at $90.63 per barrel

New York - Dow: DOWN 1.0 percent at 30,706.23 (close)

London - FTSE 100: DOWN 0.6 percent at 7,192.66 (close)

-- Bloomberg News contributed to this story --

A.Mariconda--INP