Asia stock markets decline amid inflation, oil price worries

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Asian stocks are falling as inflation concerns scuttled hopes that the US Federal Reserve may accelerate its plans to raise interest rates

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TOKYO – Asian stocks fell on Wednesday as inflation concerns outweighed hopes of the US Federal Reserve raising interest rates.

Japan’s Nikkei 225 fell 1.1% to 29,436.73 in early trade after the national holiday on Tuesday. South Korea’s Kospi ended 0.3% lower at 2,988.40. Australia’s S&P/ASX 200 closed down nearly 0.1% at 7,403.30. Hong Kong’s Hang Seng fell 0.3% to 24,588.48, while the Shanghai Composite fell 0.4% to 3,575.93.

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“Markets continue to shift their expectations toward a tighter Fed monetary policy,” said Yep Jun Rong, a market strategist at IG, adding that investors will keep an eye on US data to be released later in the day.

Some Asian central banks have started raising interest rates to reduce inflation. New Zealand on Wednesday raised its benchmark interest rate by 0.25% to 0.75%.

In October, the Reserve Bank raised it to 0.5% from a record low of 0.25%, the first such increase in more than seven years, removing some of the support since the coronavirus pandemic began.

The Fed will release minutes later in the day from its October policy meeting, potentially giving investors more information about the central bank’s plan to begin reducing bond purchases to help keep interest rates low. has been found.

Investors are watching to see whether rising inflationary pressure will prompt the Fed to reduce bond purchases and intensify its plans to raise its benchmark interest rate.

Wall Street closed out a tough day of trading, as gains in banks and energy companies outweighed losses elsewhere in the market. The S&P 500 rose 0.2% to 4,690.70 after discounting among smaller gains and losses for much of the day.

The Dow Jones Industrial Average rose 0.5% to 35,813.80, while the Nasdaq Composite ended 0.5% lower at 15,775.14. Shares of smaller companies also declined. The Russell 2000 Index fell 0.1% to 2,327.86.

More than 60% of stocks in the S&P 500 gained. Gains in banks, energy stocks and home goods companies were offset by losses in technology and communications stocks and a mix of companies that rely on consumer spending.

Retailers were mixed ahead of the official start of the holiday shopping season. Discount retailer Dollar Tree jumped 9.2% for the biggest gainer in the S&P 500. Starbucks rose 1.9%. Best Buy fell 12.3%, the biggest drop in the S&P 500, as concerns about tighter margins outweigh solid earnings.

Technology and communications companies also weighed in on the broader market. Adobe dropped 1.3% and Intel dropped 1.5%.

Zoom Video sank 14.7% a day after the video conferencing company reported that its third-quarter revenue growth has slowed.

The yield on the 10-year US Treasury rose to 1.68% from 1.63% late Monday, but fell to 1.65% in Asia by Wednesday afternoon.

The price of US crude rose 2.3% and wholesale gasoline rose 3.4% on Tuesday after President Joe Biden ordered the release of 50 million barrels of oil from the country’s strategic reserve to help reduce energy costs. . The move was made in collaboration with other large oil consuming countries including Japan.

Although aggregate data from Japan did not show the problem of inflation at the scale of other countries, critics say it is not as clearly visible in areas affected by rising energy prices, from fuel-dependent plastic bags to petroleum products. is giving.

The release of oil reserves may not bring down oil prices, but analysts say it could serve as a message for OPEC.

Benchmark US crude rose 5 cents to $78.55 a barrel in energy trading. International benchmark Brent crude fell 21 cents to $81.12 a barrel.

Shares are likely to see more mixed trading this week, with US markets closing Thursday for Thanksgiving and then closing early on Friday.

Wall Street will get some pieces of economic data on Wednesday that could give investors a better sense of the pace and breadth of the economic recovery. The Labor Department will release its weekly report on unemployment benefits. The Commerce Department releases data on third-quarter GDP and its new home sales report for October.

In currency trading, the US dollar fell from 115.15 yen to 115.09 Japanese yen. The Euro is priced at $1.1236, which is less than $1.1249.

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Associated Press writer Nick Perry contributed from Wellington, New Zealand.

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