Asian stocks follow Wall St down amid US interest rate fears

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People walk past a bank’s electronic chart showing the Hong Kong stock index on the Hong Kong Stock Exchange on Monday, April 11, 2022. Asian stock markets followed Wall Street lower on Monday after the Federal Reserve indicated that it could raise interest rates more aggressively to cool US inflation. (AP Photo/Vincent Yu)

PA

Asian stock markets followed Wall Street’s decline on Monday after the Federal Reserve signaled it may raise interest rates more aggressively to calm US inflation.

Shanghai, Tokyo, Hong Kong and South Korea all fell. Oil fell more than $2 a barrel as global economic growth may weaken.

Investors worry about possible downward pressure on economic activity due to rising interest rates, Russia’s war on Ukraine and China’s efforts to contain coronavirus outbreaks. coronavirus.

Wall Street’s benchmark, the S&P 500, fell 0.3% on Friday after Fed officials said in notes from their last meeting that they were considering raising its benchmark rate by twice as much. normal amount at future meetings. They also indicated that they would likely reduce Fed bond holdings, which could also push up commercial borrowing rates.

Investors are seeing “increasing evidence that the Federal Reserve will take a more committed approach” to fighting inflation, Stephen Innes of SPI Asset Management said in a report.

The Shanghai Composite Index fell 1.7% to 3,195.07 after inflation accelerated to 1.5% a year ago in March from 0.9% the previous month, in a context of upward pressure on world prices due to uncertainty regarding Russia’s war against Ukraine.

Inflation, which could pick up further this month, “could limit the scope for cutting interest rates” to support China’s economic growth, Nomura analysts said in a report.

The Nikkei 225 in Tokyo fell 0.8% to 26,764.91 and the Hang Seng in Hong Kong fell 2.5% to 21,336.37.

The S&P-ASX 200 in Sydney advanced less than 0.1% to 7,480.20.

The Indian Sensex opened 0.6% lower at 59,090.46. New Zealand and Singapore fell while Indonesia rose.

On Friday, the S&P 500 fell to 4,488.28 while the Dow Jones Industrial Average rose 0.4% to 34,721.12. Weakness in tech stocks dragged the Nasdaq composite down 1.3% to 13,711.00.

Investors have been worried since Fed officials began saying they would try to rein in inflation, which is at its highest level in four decades, by rolling back historically low interest rates and other stimulus measures. stimulus that drive up stock prices.

Higher interest rates generally depress economic activity and make safer assets such as bonds more attractive while making equities riskier and more expensive.

Some fear that the Fed, after being accused of reacting too late to rising inflation, is pressing the brakes too hard and tipping the world’s largest economy into recession. Economists at Deutsche Bank last week predicted a recession in the United States by the end of next year.

Oil prices retreated on expectations of weaker demand after peaking above $130 a barrel last month on concerns over disrupted supplies from Russia, the world’s second-largest exporter. .

In China, automakers and other companies are cutting production due to supply disruptions after authorities imposed strict disease controls to stop coronavirus outbreaks in Shanghai and other cities.

ACM Research, an equipment supplier to the semiconductor industry that operates in Shanghai, fell 6.1% on Friday after saying restrictions would significantly affect its revenue.

In energy markets, benchmark U.S. crude fell $2.33 to $95.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.23 to $98.26 on Friday. Brent crude, used as a price base for international oils, fell $2.33 to $100.45 a barrel in London. It rose $2.20 the previous session to $102.78 a barrel.

The dollar rose to 124.94 yen from 124.37 yen on Friday. The euro remained stable at $1.0885.

Stephen V. Lee