Asian stocks retreat as inflation augurs Fed rate hikes

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Shares in Asia are mostly lower after the latest reports of price hikes in the US to keep the Federal Reserve on track to raise interest rates in the coming months

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BANGKOK – Shares in Asia were mostly lower on Thursday after the latest reports of price hikes in the US put the Federal Reserve on track to raise interest rates in the coming months.

Tokyo, Shanghai, Hong Kong and Seoul were lower while Sydney advanced. US futures declined, with contracts in both the S&P 500 and the Dow Industrial down 0.1%.

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Rising coronavirus cases in Asia have raised uncertainty about the pace of recovery from the pandemic.

Despite high vaccination rates and strict border policies, the Omicron coronavirus variant has spread throughout Australia and other countries in the region. Japan on Wednesday reported more than 13,000 new infections, the highest level in four months. China, whose zero-COVID policies are being challenged by the outbreak weeks ahead of the Beijing Winter Games, is testing and in some cases locking down entire cities.

Tokyo’s Nikkei 225 index fell 1% to 28,489.13, while the Shanghai Composite fell 1% to 3,560.59. The Kospi was down 0.4% at 2,962.09 in Seoul.

In Hong Kong, the Hang Seng was down 0.1% at 24,379.67 and the S&P/ASX 200 was up 0.5% at 7,474.40. India’s Sensex rose 0.1%.

Taiwan’s benchmark rose 0.3% after TSMC, the world’s largest contract maker of computer chips, reported a record quarterly profit of just over $6 billion.

The yield on the 10-year Treasury was steady at 1.74%.

In addition to the direct impact of large coronavirus outbreaks on normal business activity, the impact on manufacturing and shipping could hinder a rebound from the disruptions of the past two years.

“So far, the market reaction to the Omicron wave has been moderate, but it is worth noting concerns about further impacts on global supply chains that could trigger risk-off trading,” said Anderson Alves of ActiveTrades in a report. can do.”

The S&P 500 rose 0.3% to 4,726.35 on Wednesday. The Dow Jones Industrial Average gained 0.1% to close at 36,290.32. The Nasdaq Composite rose 0.2% to 15,188.39. All in motion for weekly gains.

Shares of the smaller company declined. The Russell 2000 Index fell 0.8% to 2,176.06.

Investors were focused on a report from the Labor Department that showed consumer prices were up 7% last month. This is the fastest year-on-year movement in the Consumer Price Index in nearly four decades. The sharp increase, which was in line with economists’ forecasts, came a day after Fed Chair Jerome Powell told Congress the central bank was ready to raise rates to fight inflation.

Modest gains were led by technology stocks, retailers and other companies that rely on direct consumer spending.

Shares of the smaller company declined. The Russell 2000 Index fell 17.95 points, or 0.8%, to 2,176.06.

Wall Street is watching rising inflation closely over the impact on businesses and consumers, as well as the Fed’s plan to reduce its support for the economy and markets.

The central bank is reducing bond purchases which helped keep interest rates low throughout the virus pandemic.

The market is now likely to raise the Fed’s short-term rates by at least a quarter point in March to about 75%. It was around 36 per cent a month ago.

Wall Street will get another update on rising inflation on Thursday, when the Labor Department releases December results from an index based on US wholesale prices. It shows how inflation is affecting costs for businesses.

Businesses in many industries are passing higher costs to consumers, but are warning that they will still feel the financial impact due to higher prices and supply chain problems.

Wall Street will be watching the latest round of earnings close to see how companies are tackling inflation.

Delta Air Lines released its results on Thursday. Citigroup, JPMorgan Chase and Wells Fargo reported results on Friday.

In other trade, US benchmark crude oil fell 17 cents to $82.47 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, it rose $1.42 to $82.64 a barrel.

Brent crude, the base for international oil pricing, fell 18 cents to $84.49 a barrel.

The US dollar remained unchanged at 114.64 Japanese yen. The euro fell from $1.1444 to $1.1441.

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