Asian stocks fall after large decline on Wall St | Your money


Asian stocks fell on Monday after another week of steep losses on Wall Street as investors braced for another interest rate hike by the US Federal Reserve.

Japanese markets were closed for a holiday. Oil prices rose while US futures fell.

On Friday, a stern warning from FedEx about rapidly deteriorating trends in the economy gave investors more worries. The S&P 500 fell 0.7%, while the Nasdaq lost nearly 1%. The Dow lost nearly half a percent.

Markets are on edge with stubbornly high inflation and interest rate hikes being used to combat it. The fear is that the Fed and other central banks will overshoot their policy targets, triggering a recession.

Most economists expect the Fed to raise its primary lending rate another three-quarters of a point when central bank leaders meet this week.

“The fact is, hawkish expectations based on ‘hot under the hood’ US inflation mean markets have good reason to brace for headwinds in a higher rate outlook (for longer); and arguably ‘higher for longer’ the USD (dollar) as well,” Mizuho Bank’s Vishnu Varathan said in a comment.

The S&P 500 fell 4.8% for the week, with much of the loss coming from a 4.3% rout on Tuesday following a surprisingly hot inflation report.

All major indexes have now posted losses in four of the past five weeks.

In Asia on Monday, Hong Kong’s Hang Seng fell 0.9% to 18,586.47 while the Shanghai Composite Index lost 0.3% to 3,115.87. Australia’s S&P/ASX 200 edged down 0.1% to 6,731.80. In Seoul, the Kospi fell 1% to 2,360.22.

Japan’s central bank meets on Wednesday and Thursday amid growing pressure to counter a sharp drop in the yen, which is trading near 145 to the dollar after sharp increases in the value of the greenback. This has increased costs for businesses and consumers, who must pay more for imports of oil, gas and other basic necessities.

However, the Bank of Japan has so far held firm by maintaining an ultra-low benchmark rate of minus 0.1% in hopes of boosting investment and spending.

fedex fell 21.4% for its biggest single-day sale on Friday after warning investors that its fiscal first-quarter earnings are likely to come in lower than expected due to a drop in business. The package delivery service is also closing storefronts and corporate offices and expects business conditions to weaken further.

The S&P 500 fell 0.7% to 3,873.33. It is now down 18.7% since the start of the year. The Dow Jones Industrial Average fell 0.5% to 30,822.42 and the Nasdaq 0.9% to 11,448.40.

Manufacturers of household goods, which are generally considered less risky investments, held up better than the rest of the market. Campbell’s soup rose 1.3%.

Higher interest rates tend to weigh on equities, especially the more expensive tech sector. Technology stocks within the S&P 500 are down more than 26% for the year, and communications companies are down more than 34%. These are the worst performing sectors in the benchmark index year to date.

The housing sector is also suffering from the rise in interest rates. United States medium to long term mortgage rates climbed above 6% this week for the first time since the housing crash of 2008. Rising rates could make an already tight housing market even more expensive for homebuyers.

Reports this week from the government showed that prices for just about everything except gasoline continue to risethe the job market is always hot and consumers continue to spendall of which give arguments to Fed officials who say the economy can tolerate more rate hikes.

In other trading on Monday, benchmark U.S. crude gained 58 cents to $85.69 a barrel in electronic trading on the New York Mercantile Exchange. It edged up 1 cent to $85.11 a barrel.

Brent crude rose 72 cents to $92.07 a barrel.

The dollar strengthened to 143.14 Japanese yen from 142.94 yen. The euro slipped to 99.98 cents against $1.0014.

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