Asian markets follow Wall Street lower ahead of likely Fed rate hike

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BEIJING — Asian stock markets followed Wall Street lower Wednesday as traders prepared for a possible sharp interest rate hike from the Federal Reserve to cool inflation.

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Tokyo’s Nikkei 225 NIK,
+0.16%
advanced 0.1%. The Shanghai Composite Index SHOMP,
-0.09%
lost 0.1% while the Hang Seng HSI,
-1.54%
in Hong Kong sank 1.5%.

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The Kospi 180721,
-0.46%
in Seoul retreated 0.6% and Sydney’s S&P/ASX 200 XJO,
-0.00%
shed 0.1%. Benchmark indexes in New Zealand NZ50GR,
+0.19%
and Indonesia JAKIDX,
+0.06%
advanced while Singapore STI,
-0.21%
and Taiwan Y9999,
+0.03%
declined.

Wall Street tumbled Tuesday after Walmart WMT,
-7.60%
warned inflation that has spiked to a four-decade high of 9.1% is hurting American consumer spending.

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The Fed on Wednesday is expected to announce a rate hike of up to three-quarters of a percentage point, triple its usual margin. That would match a similar increase last month, the US central bank’s biggest in 28 years.

Investors worry aggressive action against inflation by the Fed and central banks in Europe and Asia might derail global economic growth.

“The main risk at this stage is in fact an inflation ‘overkill’ with monetary tightening too abrupt, unnecessarily pushing up the unemployment rate,” said Thomas Costerg of Pictet Wealth Management in a report. Thomas said most economic indicators and lower commodity prices already point to slower inflation ahead.

On Wall Street, the benchmark S&P 500 index SPX,
-1.15%
fell 1.2% to 3,921.05. The Dow Jones Industrial Average DJIA,
-0.71%
dropped 0.7% to 31,761.54. The Nasdaq composite comp,
-1.87%
closed 1.9% lower at 11,562.57.

Walmart slumped 7.6% after the retail giant cut its profit outlook for the second quarter and the full year late Tuesday. It said rising prices for food and gasoline are forcing shoppers to cut back on more profitable discretionary items, particularly clothing.

The retailer’s profit warning in the middle of the quarter is rare and raised concerns about how the highest inflation in 40 years is affecting the entire retail sector.

In energy markets, benchmark US crude CLU22,
+0.25%
rose 30 cents to $95.28 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.72 on Tuesday to $94.98. Brent crude BRNU22,
+0.05%,
the price basis for international oils, added 5 cents to $99.51 per barrel in London.

The dollar USDJPY,
+0.01%
rose to 136.97 yen from Tuesday’s 136.00 yen.

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Credit: www.marketwatch.com /

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