TOKYO — (AP) — Asian stocks fell Thursday, echoing a retreat on Wall Street as investors worried about rising interest rates and rising coronavirus cases in parts of the world. region.
Benchmarks fell in Tokyo, Shanghai, Hong Kong, Seoul and Sydney. Oil prices fell more than $2 a barrel.
In China, strict COVID-19 restrictions are back in Hong Kong as infections rise, while they are gradually being lifted in Shanghai. China is sticking to a “zero-COVID” strategy that requires lockdowns, mass testing and isolation of those infected or who have been in contact with someone who tested positive.
“The gloomy mood on Wall Street may not provide a very positive backdrop for today’s Asian session, with US-listed Chinese stocks falling in tandem with their Western counterparts overnight,” he said. said Yeap Jun Rong, market strategist at IG in Singapore.
Japan’s benchmark Nikkei 225 lost 0.3% to 27,367.82. Australia’s S&P/ASX 200 edged down 0.9% to 7,172.80. The South Korean Kospi slipped 1.1% to 2,656.19. Hong Kong’s Hang Seng fell 1.5% to 20,982.29, while the Shanghai Composite lost 0.3% to 3,172.66.
On Wall Street, stocks began their slide immediately after the release of several reports on the US economy, including one showing that manufacturing growth was stronger than expected last month. This bolstered investor expectations that the Federal Reserve would continue to aggressively raise interest rates to slow the economy in hopes of bringing inflation under control.
“Investors are worried about the approaching Fed meeting, and with inflation expected to remain stubbornly high, the Fed is unlikely to get away with loading up the rate-tightening cycle before stopping at fall,” said Sam Stovall, chief investment strategist at CFRA.
The S&P 500 fell 0.7% to 4,101.23. The Dow Jones Industrial Average fell 0.5% to 32,813.23.
The Nasdaq composite slipped 0.7% to 11,994.46. Small company stocks also lost ground. The Russell 2000 Index fell 0.5% to 1,854.82.
Daily market swings have become routine on Wall Street amid fears that overly aggressive rate hikes from the Fed could push the economy into a recession. While this may avoid stifling the economy, higher rates still put downward pressure on stocks and other investments. Meanwhile, high inflation is eating away at corporate earnings, while the war in Ukraine and anti-COVID-19 restrictions slowing business in China have also weighed on markets.
The Fed has signaled that it may continue to raise its main short-term interest rate to double the usual amount at upcoming meetings in June and July. Last week, speculation mounted that the Fed might consider a pause at its September meeting, which helped stocks rise. But those hopes dwindled after Wednesday’s manufacturing report from the Institute for Supply Management.
It showed that growth in the US manufacturing sector accelerated last month, contrary to economists’ expectations of a slowdown. A separate report said the number of job vacancies across the economy fell slightly in April, but remained much higher, at 11.4 million, than the number of unemployed.
Wednesday marked the start of the Fed’s program to cut some of the trillions of dollars in Treasuries and other bonds it amassed during the pandemic. Such a decision should put upward pressure on longer-term 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 on Wall Street on Wednesday, on fears that inflation could squeeze their earnings.
Delta Air Lines stock fell 5.2% after it said it expected to see fuel costs of $3.60 to $3.70 a gallon this quarter, up from its previous forecast of $3.35. Even aside from fuel, Delta said spending could climb up to 22% above 2019 levels per seat. This is up from an earlier forecast of 17%,
Norwegian Cruise Line and United Airlines each lost 4.5%.
Early Thursday, benchmark U.S. crude fell $2.82 to $112.44 a barrel. It rose 0.5% to $115.26 on Wednesday. Brent crude, the international standard, fell $2.21 to $114.08 a barrel.
In currency trading, the US dollar slipped to 130.10 Japanese yen from 130.15 yen. The euro fell from $1.0649 to $1.0654.
AP Business Writers Stan Choe and Alex Veiga contributed.
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