Asian stocks follow Wall St lower on economy fears
BEIJING Asian stock market s fell mostly Friday after Wall Street fell due to fears that interest rate hikes would depress global economic activity.
Tokyo and Seoul fell. Shanghai and Hong Kong advanced. Oil prices edged lower but stayed above $115 per barrel.
Wall Street’s benchmark S&P 500 Index fell 3.3% after Britain’s central banks raised its key interest rate in an effort to cool price increases. The rates were also increased by central banks in Taiwan and Switzerland.
Investors are concerned that the U.S. and other major economies could be pushed into recession by the efforts to control inflation, which has been at four-decade highs.
“Pain has been inflicted almost everywhere, and sharing doesn’t make it better,” Tan Boon Heng, Mizuho Bank, stated in a report.
Markets weren’t soothed by President Joe Biden’s comments to The Associated Press Thursday that he sees reasons for optimism about economic conditions. Biden stated that a recession was “not inevitable”.
The Shanghai Composite Index advanced less than 0.1% to 3,287. 88 while the Nikkei 225 in Tokyo fell 2.3% to 25,822.56. The Hang Seng in Hong Kong gained 0.6% to 20,983.41.
The Kospi in Seoul retreated 1.2% to 2,420. 34 and Sydney’s S&P-ASX 200 tumbled 2.1% to 6,450.30.
New Zealand’s, Bangkok’s and Jakarta’s declines were offset by a rise in Singapore.
On Wall Street the S&P 500 fell to 3 ,666. 77 for its sixth decline in the past seven trading sessions. Only 3% of the stocks in the index declined.
The benchmark lost its 1.5% gain the day before, after the Fed announced a rate increase of 0. 75 percentage points, three times is usual margin. Jerome Powell, Chair of the Fed, stated Wednesday that they are not trying to incite a recession. “
The S&P 500 is 23.6% below its Jan. 3 record. This erases gains from 2021,, one of Wall Street’s most successful years this century.
The Dow Jones Industrial Average lost 2.4% to 3,666.77. The Nasdaq dropped 4.1% to 10,646.10. Japan’s central bank concluded a two-day meeting on Friday. There were no major changes in its ultra-low-interest rate policy, which was imposed many years ago to prevent deflation or sinking prices. It has so far avoided raising rates.
Along with raising interest rates, some of the trillions in bonds it bought through the pandemic are being allowed to roll off the Fed’s balance sheet. This should increase the pressure on long-term interest rates.
Last week, more Americans applied for unemployment benefits than the previous week, according to a report on Thursday. However, there are more signs of trouble.
In energy markets, benchmark U.S. oil lost 57 cents to $117. 02 per barrel in electronic trading on the New York Mercantile Exchange. The contract increased $2. 27 on Thursday to $117.58. Brent crude, the price basis for international trading, sank 47 cents to $119. 34 per barrel in London. It gained $1. 30 the previous session to $119.81.
The dollar gained to 133. 40 yen from Thursday’s 132. 00 yen. The euro fell to $1. 0536 from $1.0573.
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