Asian shares mixed after rate jitters tumble on Wall Street

Asian shares mixed after rate jitters tumble on Wall Street

BANGKOK Shares were mostly lower across Asia on Friday after stocks plummeted on Wall Street. This was due to expectations that central banks would double down on fighting inflation with interest rate increases.

Tokyo’s Nikkei 225 index lost 1.3% to 27,881. 78 while the Kospi in Seoul shed 1.2% to 2,593.60. In Australia, the S&P/ASX 200 declined 0.9% to 6,956.40. Hong Kong’s Hang Seng slipped 0.2%, shedding early gains, to 21,828.86.

The Shanghai Composite index added 0.6% to 3,257. 59 after the government reported that consumer price inflation remained muted, at 2.1%, in May. This gives regulators more flexibility to adjust policy to combat a prolonged economic slowdown, which is worsened by widespread restrictions to stop the spread of coronavirus.

Another market-related move was made by the China Security Regulatory Commission. It stated that it had not yet reviewed and evaluated Ant’s Group’s plan to launch an initial public offering. This countered a report that said approval for the IPO was pending. However, the commission stated it supported share listings of “qualified platforms companies” on both domestic and international markets. The government’s quashing Ant’s earlier attempt to launch an IPO was made amid a wide crackdown on large technology companies. This has impacted markets, particularly in Hong Kong, where many such companies are listed.

On Thursday the S&P 500 dropped by 2.4%. Benchmarks across the Atlantic also fell after the European Central Bank announced that it would increase interest rates next month, for the first time in over a decade. A September hike is possible, possibly double the July increase. The central bank will also stop its bond-buying program next year.

This is part of a global trend in which central banks are cutting the ultra-low interest rates, which supported borrowing, economic growth, stock prices and stock prices during the pandemic. It also floods the markets with investments seeking higher returns. The central banks are now focusing on slowing down growth to curb high inflation. If they are too aggressive, such moves could lead to a recession. Higher interest rates could cause investors to swap shares for different investments, even if the central banks manage to balance the delicate act and avoid a recession. The Fed is expected to raise its key interest rates by half a percentage point next week, which would be the second consecutive increase of twice the usual amount. Investors anticipate a third increase in July.

Where the Fed goes from here depends on inflation’s trajectory. Wall Street is closely monitoring the U.S. consumer prices index readings, which are due Friday morning. Economists anticipate it to show that inflation has slowed slightly to 8.2% in May, down from 8.3% a month ago.

Investors are looking for signs that inflation may be at its peak. This could be good news for markets as it could indicate a more aggressive Fed.

The S&P 500 lost 97. 95 points to close at 4,017. 82, while the Dow Jones Industrial Average sank 1.9% to 32,272.79. The Nasdaq composite tumbled 2.8% to 11,754.23.

European stocks fell immediately after the European Central Bank’s rate announcement. This was before U.S. markets opened. The CAC 40 index in Paris lost 1.4% and Germany’s DAX lost 1.7%.

A reported that slightly more U.S. workers applied for unemployment last week, than economists anticipated. This is a potential negative signal, but overall the number remains low. Higher gasoline prices have put a tighter squeeze both on households and companies, increasing the budget pressure. Crude oil prices were down modestly on Thursday, but they remain up by roughly 60% for the year. The Russian invasion of Ukraine is responsible for a large part of the increase.

Benchmark U.S. crude oil lost 66 cents to $120. 85 per barrel in electronic trading on the New York Mercantile Exchange. It gave up 60 cents to $121. 51 on Thursday.

Brent crude oil, the pricing standard for international trading, lost 72 cents to $122. 35 per barrel.

In currency dealings, the dollar weakened to 134. 13 Japanese yen from 134. 35 yen. The euro rose to $1. 0634 from $1.0619.

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