Asian stocks fall as investors eye US rate hikes and inflation

News Stocks 2022 Worst Year Since 2008%20(1)
Source: AI

Stock markets in Asia were mostly lower on Wednesday, following a decline in Wall Street after the S&P 500 reached its highest level in over a year. Futures in the United States remained steady, while oil prices increased.

In Tokyo, the Nikkei 225 rose by 0.3% to 33,575.14, but the Hang Seng in Hong Kong fell by 2% to 19,217.66. The Shanghai Composite index dropped by 1.3% to 3,197.90, and the Kospi in Seoul slipped by 0.9% to 2,582.63.

Australia’s S&P/ASX 200 also experienced a decline of 0.6% to 7,314.90. Bangkok’s SET lost 0.8%, while India’s Sensex was up by 0.3%.

This week doesn’t have many significant events that could impact the market. Federal Reserve Chair Jerome Powell is set to testify before Congress on Wednesday and Thursday. Last week, the Fed decided to keep its lending rate unchanged for the first time in over a year, but it warned that it might raise rates twice more in the future.

The Bank of England will also hold a meeting on Thursday to discuss interest-rate policy. Central banks worldwide are taking different approaches to combat inflation amidst concerns about a struggling global economy.

Investors are being cautious ahead of these events and are watching for positive inflation data that aligns with the market’s expectations. On Tuesday, as U.S. markets reopened after the Juneteenth holiday, the S&P 500 fell by 0.5% to 4,388.71, while the Dow Jones Industrial Average dropped by 0.7% to 34,053.87, and the Nasdaq composite lost 0.2% to 13,667.29.

The stock market in the U.S. took a step back following several positive movements, driven by hopes that the economy will avoid a recession and inflation will ease, allowing the Fed to halt interest rate hikes. However, concerns persist that the Fed will keep rates high for a longer period, potentially impacting the economy. Additionally, worries about inflation’s long-term impact and China’s struggling recovery from COVID-19 restrictions are contributing to market uncertainty.

Most stocks in the S&P 500 experienced declines, particularly in the energy sector, as lower global economic prospects led to decreased oil prices. Exxon Mobil and Chevron both fell by 2.3%.

On a positive note, homebuilders saw gains after a report showed that they started construction on more sites than expected. Building permits, an indicator of future activity, also exceeded expectations. PulteGroup and D.R. Horton experienced increases in their stock prices.

In trading on Wednesday, U.S. benchmark crude oil rose by 20 cents to $71.39 per barrel, while Brent crude, the international standard, added 16 cents to $76.06 per barrel.

The dollar strengthened against the Japanese yen, rising to 142.14 yen from 141.43 yen. The euro remained unchanged at $1.0922.

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