Asian stocks fell on Monday after another week of heavy losses on Wall Street as investors braced for another rate hike by the US Federal Reserve.
Japanese markets are closed for public holidays. Crude oil prices rose as US futures fell.
Investors became more concerned on Friday after FedEx issued a stern warning that economic trends were deteriorating rapidly. The S&P 500 dropped him 0.7% and the Nasdaq dropped almost 1%. The Dow lost almost half a percent.
Stubbornly high inflation and rising interest rates to counteract it have put the market on edge. The concern is that the Fed and other central banks could overshoot their policy targets and trigger a recession.
Most economists expect the Fed to raise the primary lending rate by another three-quarters of a percentage point when central bankers meet this week.
“The fact is that hawkish expectations built on US inflation printing ‘under the hood’ suggest that markets have good reason to brace for headwinds in the prospect of higher (longer) interest rates. Arguably, the U.S. dollar is also “higher in the long term,” Mizuho Bank’s Vishnu Varathan said in a commentary.
The S&P 500 is down 4.8% in a week. Much of the loss comes from his 4.3% plunge on Tuesday following a surprisingly hot report on inflation.
All major indices have now posted losses in four of the last five weeks.
In Asia on Monday, Hong Kong’s Hang Seng fell 0.9% to 18,586.47 while the Shanghai Composite Index fell 0.3% to 3,115.87. Australia’s S&P/ASX 200 fell 0.1% to 6,731.80. In Seoul, Kospi fell 1% to 2,360.22.
Japan’s central bank met on Wednesday and Thursday as pressure mounted to counter a sharp drop in the yen, which is trading near 145 yen to the dollar after the dollar surged in value. This has driven up costs for businesses and consumers, who have had to pay more to import oil, gas and other commodities.
However, the Bank of Japan has so far kept interest rates at minus 0.1% in hopes of stimulating investment and consumption.
FedEx plunged 21.4%, posting its biggest single-day sell-off on a record Friday. That’s after warning investors that first-quarter earnings are likely to fall short of expectations due to a downturn in business. Couriers have also closed stores and corporate offices, further deteriorating the business environment.
The S&P 500 was down 0.7% at 3,873.33. It is down 18.7% so far this year. The Dow Jones Industrial Average dropped his 0.5% to 30,822.42 and the Nasdaq dropped his 0.9% to 11,448.40.
Household goods makers, usually considered low-risk investments, have held up better than others in the market. Campbell’s Soup He rose 1.3%.
Rising interest rates tend to weigh on stocks, especially the more expensive tech sectors. Tech stocks in the S&P 500 are down more than 26% over the year, and telecom companies are down more than 34% of him. These are the worst performing sectors within the benchmark index so far this year.
The housing sector has also been hit by rising interest rates. Average long-term mortgage rates in the US have topped 6% for the first time since the 2008 housing crash. Rising interest rates could make an already tight housing market even more expensive for homebuyers.
Prices for almost everything but gas are still rising, the job market is still overheating, and consumers are continuing to spend, all of which are pushing Fed officials to stock up on ammunition, according to a report from the government this week. and the economy can withstand further rate hikes. .
In other trading on Monday, US benchmark crude rose 58 cents to $85.69 a barrel in electronic trading on the New York Mercantile Exchange. One cent higher at $85.11 a barrel.
Brent crude rose 72 cents to $92.07 a barrel.
The dollar rose from 142.94 yen to 143.14 yen. The euro fell from his $1.0014 to his 99.98 cents.
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