Asian stocks slip after Wall Street slump
BANGKOK (AP) – Shares in Asia were mostly lower on Friday, with only gains in Shanghai after the government said inflation held steady at just over 2% in May, allowing more leeway for policies to boost sluggish growth. was given.
Tokyo’s Nikkei 225 index fell 1.5% to 27,824.29, while the Kospi in Seoul fell 1.1% to 2,595.87. In Australia, the S&P/ASX 200 fell 1.3% to 6,932.00. Hong Kong’s Hang Seng closed 0.3% lower at 21,801.16 with an early gain.
The Shanghai Composite Index rose 1.4% to 3,284.83 after the government reported that consumer price inflation remained muted at 2.1% in May. It gives regulators more room to adjust policy to counter a prolonged economic slowdown worsened by broad restrictions imposed to combat the coronavirus outbreak.
In another market-related move, the China Security Regulatory Commission issued a statement saying it has not yet evaluated and researched to revive a plan by fintech company Ants Group to conduct an initial public offering. It denied a report that said approval for an IPO was pending, but the commission said it supported share listings of “qualified platform companies” in domestic and foreign markets.
Ant’s earlier attempt to launch an IPO was rebuffed by the government, amid widespread crackdown on large technology companies, particularly in Hong Kong, where many such companies do business.
On Thursday, the S&P 500 dropped 2.4% and benchmarks across the Atlantic also fell when the European Central Bank said it would raise interest rates next month for the first time in more than a decade. Another hike is set for September, possibly more than double that of July, and the central bank will also halt its bond-buying program next month.
It is part of a rising global tide where central banks are removing ultra-low interest rates that support borrowing, economic growth and stock prices through the pandemic and flooding markets with investments seeking higher returns. has arrived. Now, central banks are focusing on slowing growth to beat high inflation.
The risk is that such moves could lead to a recession if they are too aggressive. Even if central banks can lift the delicate balance act and avoid a recession, higher interest rates may prompt investors to swap shares for other types of investments.
Widespread hope is that the Fed will raise its key interest rate by half a percentage point next week, the second straight increase of twice the normal amount. Investors expect a third hit in July.
Where the Fed goes from there depends on the path of inflation. The latest report on the US consumer price index is due later Friday morning and economists expect inflation to rise to 8.2% in May from 8.3% a month earlier.
Investors are expecting signs that inflation may already be peaking, which bodes well for markets as it could mean a less aggressive Fed.
The S&P 500 ended 97.95 points lower at 4,017.82, while the Dow Jones Industrial Average fell 1.9% to 32,272.79. The Nasdaq Composite fell 2.8% to close at 11,754.23.
A big factor in inflation is high gasoline prices, which are putting a tighter pressure on both companies and households, increasing the pressure on the budget. Crude oil prices have risen nearly 60 per cent this year. Much of the surge is due to Russia’s invasion of Ukraine.
As of early Friday, the AAA Auto Club hit the national average of $4.99 for a regular gallon in the United States.
Benchmark US crude oil fell 80 cents to $120.71 a barrel in electronic trading on the New York Mercantile Exchange. It rose 60 cents to $121.51 on Thursday.
Brent crude, the pricing standard for international trade, fell 70 cents to $122.37 a barrel.
In currency transactions, the dollar weakened from 134.35 yen to 133.66 Japanese yen. The euro rose from $1.0619 to $1.0639.
