Markets: Asian shares track Wall Street decline
Asian stocks fell on Monday after Wall Street benchmarks closed out their worst week since early December. US futures rose as oil prices fell.
Reports on inflation, the job market and retail spending have been hotter than expected, with analysts weighing down forecasts on how high interest rates the Federal Reserve will have to slow the U.S. economy and keep inflation under control. pulling up.
Rising interest rates put pressure on business activity and investment prices. So far, they don’t seem to be slowing growth as much as expected. The S&P 500 fell 1.1% on Friday, capping its third straight loss.
“It is becoming increasingly clear that inflation, and with it inflation expectations and wage pressures, will not decline in a predictable and linear fashion,” Mizuho Bank said in a commentary. “Early Monday trading suggests risk aversion has been brought to Asian markets.”
Tokyo’s Nikkei 225 Index fell 0.1% to 27,423.96, while Seoul’s Kospi fell 0.9% to 2,402.64.
In Hong Kong, Hang Seng fell 0.3% to 19946.63 and the Shanghai Composite Index fell 0.3% to 3,258.03. The Australian S&P/ASX 200 fell 1.1% to 7,224.80.
Bangkok fell 0.2% and Mumbai’s Sensex fell 0.6%.
On Friday, the S&P 500 closed at 3,970.04. The Dow Jones Industrial Average fell 1% to 32,816.92 and the Nasdaq Composite fell 1.7% to 11,394.94.
Higher interest rates may depress inflation but increase the risk of recession.
Prices in January were 4.7% higher year-on-year after ignoring food and energy costs, which can fluctuate faster than others, according to the Fed’s favorite inflation measure, reported on Friday. This was an acceleration from December inflation and higher than economists’ expectations of 4.3%.
This echoes other reports earlier in the month that showed inflation was higher than expected in January at both the consumer and wholesale levels.
Other data on Friday showed that private consumption, the largest part of the economy, returned to growth in January, up 1.8% from December. Another measure of consumer sentiment was slightly stronger than previously expected, although sales of new homes were a little better than expected.
Such strength, combined with a highly resilient job market, increases the likelihood that the economy will be able to avoid a recession in the short term.
Tech and high-growth stocks again bore the brunt of the pressure. Investments that are seen as the most expensive and risky, or that keep investors waiting the longest for significant growth, are the most vulnerable to rising interest rates.
Traders are betting more that the Fed will raise the benchmark interest rate to at least 5.25% and keep it there until the end of the year. Now he’s in the range of 4.50% to 4.75% he, and a year ago was near zero.
Yields in the US Treasury market rose this month and even higher on Friday on hopes of a stronger Federal Reserve (Fed) performance.
Yields on 10-year government bonds remained steady at 3.94%, up from 3.89% late Thursday. Helps set interest rates for mortgages and other important loans. The two-year yield, driven by the Federal Reserve’s expectations, rose to 4.79% from 4.71%, nearing its highest level since 2007.
In other trading on Monday, US benchmark crude fell 48 cents to $75.84 a barrel in electronic trading on the New York Mercantile Exchange. It rose 93 cents to $76.32 a barrel on Friday. Brent crude, the price benchmark for international trading, fell 57 cents to $82.25 a barrel.
The dollar rose from 136.45 yen to 136.31 yen. The euro fell from he $1.0549 to he $1.0548.