Asian stocks fell on Thursday, echoing a slide on Wall Street as investors worried about rising interest rates and rising coronavirus cases in parts of the region.
Benchmarks fell in Tokyo, Shanghai, Hong Kong, Seoul and Sydney. Oil prices fell by more than $2 a barrel.
In China, strict COVID-19 restrictions are back in Hong Kong With infections rising, while it is gradually being lifted in Shanghai. China has stuck to a “zero COVID” strategy that requires lockdowns, mass testing and isolation for people who are infected or have been in contact with someone who has tested positive.
“The weak mood on Wall Street may not provide a significant positive backdrop for today’s Asia session, with US-listed Chinese stocks dropping alongside their western peers overnight,” said Yeap Jun Rong, market strategist at IG in Singapore.
Japan’s Nikkei 225 index lost 0.3 percent to 27,367.82. Australia’s S&P/ASX 200 fell 0.9% to 7,172.80. South Korea’s Kospi index fell 1.1 percent to 2,656.19 points. Hong Kong’s Hang Seng fell 1.5% to 20,982.29, while the Shanghai Composite fell 0.3% to 3,172.66.
On Wall Street, stocks started falling immediately after several reports were released on the US economy, including one showing that manufacturing growth was stronger last month than expected. This has boosted investor expectations that the Federal Reserve will continue aggressively raising interest rates to slow the economy in hopes of curbing inflation.
said Sam Stovall, chief investment strategist at CFRA.
The S&P 500 fell 0.7% to 4101.23. The Dow Jones Industrial Average lost 0.5% to 3,2813.23.
The Nasdaq Composite Index fell 0.7% to 11994.46. Small-cap stocks also fell. The Russell 2000 Index fell 0.5% to 1854.82.
Daily market volatility has become a routine on Wall Street amid concerns that sharp interest rate increases by the Federal Reserve could push the economy into recession. Even if you can avoid strangling the economy, higher rates put downward pressure on stocks and other investments regardless. Meanwhile, high inflation is eroding corporate profits, while the war in Ukraine Business slowdown and anti-COVID-19 restrictions in China It also affected the markets.
The Fed indicated that it may continue to raise its key short-term interest rate by twice the usual amount at the upcoming June-July meetings. Speculation heightened last week that the Fed might consider a pause at its September meeting, helping stocks rally. But those hopes were dashed after Wednesday’s manufacturing report from the Institute for Supply Management.
US manufacturing growth showed acceleration last month, contrary to economists’ expectations for a slowdown. A separate report stated that the number of vacancies Across the economy it fell a bit in April but is still much higher, at 11.4 million, than the number of unemployed.
Wednesday saw the start of the Federal Reserve’s program to trim some of the trillions of dollars in Treasuries and other bonds it has raised during the pandemic. Such a move should put upward pressure on long-term interest rates.
The 10-year Treasury yield rose to 2.92% from 2.84% just before the report was released.
Airlines and shares of other travel-related companies were among the biggest losers Wednesday on Wall Street amid concerns that inflation is cutting their earnings.
Delta Air Lines stock fell 5.2% after it It said it expects fuel costs to range from $3.60 to $3.70 per gallon this quarter, up from its previous forecast of $3.35. Even outside of fuel, Delta said expenses could rise as much as 22% above 2019 levels on a seat basis. This is 17% higher than a previous forecast,
Norwegian Cruise Line and United Airlines lost 4.5%.
Early Thursday, benchmark US crude lost $2.82 to $112.44 a barrel. It rose 0.5 percent to settle at $115.26 on Wednesday. Brent crude, the international benchmark, fell $2.21 to $114.08 a barrel.
In currency trading, the US dollar fell to 130.10 yen from 130.15 yen. The euro rose to $1.0654 from $1.0649.
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AP Business business writer Stan Choi and Alex Vega contributed.