Asian stocks mixed after Wall Street rate drop
By ELAINE KURTENBACH
BANGKOK (AP) — Stocks were mostly down in Asia on Friday, with only Shanghai rising, after stocks fell on Wall Street on expectations that central banks will double down on inflation with rate hikes. ‘interest.
Tokyo’s Nikkei 225 lost 1.3% to 27,881.78 while Seoul’s Kospi lost 1.2% to 2,593.60. In Australia, the S&P/ASX 200 fell 0.9% to 6,956.40. Hong Kong’s Hang Seng slipped 0.2%, losing its first gains, to 21,828.86.
The Shanghai Composite Index rose 0.6% to 3,257.59 after the government announced that consumer price inflation remained subdued at 2.1% in May. That gives regulators more room to adjust policy to counter a prolonged economic downturn made worse by widespread restrictions imposed to counter coronavirus outbreaks.
In another market-related move, China’s Security Regulatory Commission released a statement saying it had yet to assess and seek relaunch of a plan by fintech firm Ant’s Group to proceed with a initial public offering. This contradicted a report that said IPO approval was pending, but the commission said it supported stock listings of “qualified platform companies” in domestic and overseas markets.
The government’s cancellation of Ant’s earlier efforts to launch an IPO came amid a broad crackdown on big tech companies that has rattled markets, particularly in Hong Kong, where many tech companies type are listed.
On Thursday, the S&P 500 fell 2.4% and benchmarks across the Atlantic also fell as the European Central Bank announced it would raise interest rates next month for the first time in addition to a decade. Another hike is expected for September, possibly double July’s, and the central bank will also end its bond-buying program next month.
It’s part of a growing global tide where central banks are scrapping the ultra-low interest rates that have supported borrowing, economic growth and stock prices during the pandemic and have also flooded markets with investment at the moment. search for higher returns. Today, central banks are focused on slowing growth to curb high inflation.
The risk is that such moves could cause a recession if they are too aggressive. Even if central banks can pull off the delicate balancing act and avoid a recession, higher interest rates can lead investors to swap stocks for other types of investments.
Most people expect the Fed to raise its key rate next week by half a percentage point, the second straight increase of twice the usual amount. Investors expect a third to hit in July.
The Fed’s direction from here depends on the path of inflation, which is why Wall Street is so aware of the latest reading of the US Consumer Price Index, which is due Friday morning. Economists expect inflation to have eased slightly to 8.2% in May from 8.3% a month earlier.
Investors looked for signs that inflation may have already passed its peak, which would be good for markets as it could mean a less aggressive Fed.
The S&P 500 lost 97.95 points to close at 4,017.82, while the Dow Jones Industrial Average fell 1.9% to 32,272.79. The Nasdaq composite fell 2.8% to 11,754.23.
European stocks fell immediately after the European Central Bank’s rate announcement, which came before US markets opened. The CAC 40 index in Paris lost 1.4% and the German DAX lost 1.7%.
A report showed slightly more American workers filing for unemployment last week than economists expected. This is a potentially negative signal, but the overall number is still low.
Rising gasoline prices have put greater pressure on businesses and households, increasing pressure on budgets. Crude oil prices fell slightly on Thursday, but remain up about 60% for the year. Much of the jump is due to Russia’s invasion of Ukraine.
Benchmark U.S. crude oil fell 66 cents to $120.85 a barrel in electronic trading on the New York Mercantile Exchange. It fell 60 cents to $121.51 on Thursday.
Brent crude, the price standard for international trade, fell 72 cents to $122.35 a barrel.
In foreign exchange transactions, the dollar weakened to 134.13 Japanese yen from 134.35 yen. The euro fell from $1.0619 to $1.0634.