Asian stocks slide after Wall Street falls across the board | WSJ Business

Asian shares fell on Monday after Wall Street fell sharply for a week as investors braced for another rate hike by the Federal Reserve.

Japanese markets were closed for a holiday. Oil prices rose, while U.S. futures fell.

Investors were even more worried on Friday after FedEx issued a stark warning on Friday about rapidly deteriorating economic trends. The S&P 500 fell 0.7% and the Nasdaq lost nearly 1%. The Dow Jones fell nearly half a percent.

Markets have been on edge due to stubbornly high inflation and interest rate hikes designed to combat it. There are concerns that the Federal Reserve and other central banks could exceed their policy targets, triggering a recession.

Most economists predict the Fed will raise its key lending rate by another three-quarters of a point when central bank leaders meet this week.

“Indeed, hawkish expectations built on ‘behind the scenes’ U.S. inflation data suggest that markets have good reasons to brace for headwinds amid the prospect of higher (longer) interest rates; Mizuho’s Vishnu Varathan said in comments, The U.S. dollar (USD) can also be said to be “long higher”.

The S&P 500 fell 4.8% for the week, with most of the loss coming from a 4.3% drop following Tuesday’s unexpectedly popular inflation report.

All major stock indexes have fallen in four of the past five weeks.

In Asia on Monday, Hong Kong’s Hang Seng lost 0.9% to 18,586.47, while the Shanghai Composite lost 0.3% to 3,115.87. Australia’s S&P/ASX 200 edged down 0.1% to 6,731.80. In Seoul, the Kospi fell 1 percent to 2,360.22.

The Bank of Japan meets on Wednesday and Thursday as pressure mounts to deal with a sharp fall in the yen, which traded near 145 against the dollar after a sharp rise in the greenback. This increases costs for businesses and consumers, who must pay more for imports of oil, gas and other essential goods.

However, the Bank of Japan has so far held on to keeping its benchmark interest rate at an ultra-low minus 0.1% in a bid to stimulate investment and spending.

FedEx fell 21.4% on Friday in its biggest one-day sell-off on record, after the company warned investors that its fiscal first-quarter profit could be lower than expected due to a slump in business. Package delivery services are also closing storefronts and corporate offices, and business conditions are expected to weaken further.

The S&P 500 fell 0.7% to 3,873.33. It has fallen 18.7% so far this year. The Dow Jones Industrial Average fell 0.5% to 30,822.42 and the Nasdaq lost 0.9% to 11,448.40.

Homeware makers are generally considered a lower risk investment and outperform the rest of the market. Campbell Soup rose 1.3 percent.

Higher interest rates tend to weigh on stocks, especially the pricier tech sector. Tech stocks in the S&P 500 are down more than 26% this year, with communications companies down more than 34%. They are the worst-performing sectors in the benchmark index so far this year.

The real estate sector has also been hurt as interest rates have risen. The average U.S. long-term mortgage rate climbed above 6 percent this week for the first time since the 2008 housing crash. Higher interest rates could make an already tight housing market more expensive for home buyers.

Reports from the government this week show that prices for nearly everything except natural gas are still rising, the job market remains red, and consumers continue to spend, all of which provide ammunition for Fed officials who say the economy can tolerate more fuel. interest.

In other trade on Monday, U.S. benchmark crude gained 58 cents to $85.69 a barrel in electronic trading on the New York Mercantile Exchange. It edged up 1 cent to $85.11 a barrel.

Brent crude rose 72 cents to $92.07 a barrel.

The dollar rose to 143.14 yen from 142.94 yen. The euro fell to 99.98 cents from $1.0014.

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