Asian Stocks Blended as Wall St Drops on Gain Worries
Asian stock exchanges were mixed on Thursday after Wall Street has shrunk amid fears that higher interest rates will slow global economic growth. Hong Kong and Shanghai advanced. Seoul and Tokyo fell. The oil price fell by more than $2 per barrel, reaching $100. The chairman of the Federal Reserve, Jerome Powell, told members of Congress on Wednesday that the US Federal Reserve does not need to “provoke a recession”. This is an opportunity to reduce inflation, which is at a four-decade high due to rising rates.
The Wall Street S&P 500 Index lost 0.1% after fluctuating between 1% and 1.3% losses during the day. According to experts, the market now recognizes that a recession is a risk because it is a complete rejection. The Shanghai Composite Index rose to 3,285.99, for a total of 0.6%. The Nikkei 225 fell 0.3% to 26,059.39. Hang Seng rose 1% to a total of 21,209.09. Kospi fell to 2,308.20, up 1.5% overall. The S&P-ASX 200 was up 6.523.50, down 0.2%. Bangkok, New Zealand, and Singapore advanced; Jakarta fell. Central banks in the US and Europe are trying to stem inflation at a four-decade high.
Investors fear that this will hamper global growth. Powell, in his speech, acknowledged the risks; However, he said the Fed needed to restore stable prices. The most aggressive and synchronized tightening is now expected by global central banks since the 1980s.
The S&P 500 fell to 3,759.89. Shares in the index are divided equally between gains and losses. The Dow stood at 30,483.13. The Nasdaq composite lost 0.2% to 11,053.08. The S&P 500 is in the bear market, down more than 20% from its January 3 peak. This has decreased in the last 11 to 10 weeks.
Asian stocks and the Fed
The Fed raised its benchmark interest rate by three-quarters of a percentage point last week, three times the standard limit and the most significant increase in almost three decades. Federal policymakers say they expect more rate hikes; This and next year, too, at a faster pace than previously predicted. They say the central bank’s key interest rate should reach 3.8% by the end of 2023; This is the highest rate in 15 years. Rising prices have worsened consumer sentiment in the US. Retail costs are declining.
Fears of inflation were exacerbated by oil, wheat, and other commodities’ rising prices due to Russia’s attack on Ukraine. Oil prices fell sharply on Wednesday. Thus, the demand for traders will likely weaken as economic activity declines. The price of US crude oil for electronic trading on the New York Mercantile Exchange fell to 103.51 dollars. The contract was reduced to $106.19 on Wednesday. The base price for Brent crude oil fell to $106.22 a barrel in London. The previous session was $108.65. The dollar fell to 135.34 yen. The euro rose to $1.0570.
Seoul Shares
South Korean stocks fell again on Thursday. Investors avoided risky assets amid fears of monetary tightening and recession. The local currency has fallen to its lowest level against the US dollar in 13 years. Trade volume was moderate at $ 7.67 billion.
Analysts estimate that the market will remain volatile for the time being. The US Federal Reserve may raise interest rates again next month. The Bank of Korea also seems to be heading for significant growth in the course. At night, Wall Street closed; Powell acknowledged that rising aggressive rates by the central bank could lead to an economic downturn.
SK Hynix retreated 2.17 percent. LG Energy Solution fell 0.25 percent, and LG Chem fell 0.36 percent. Hyundai Motor lost 0.29 percent. Kia added 1.05 percent. The local currency against the US dollar ended at 1,301.80 won, less than the closing rate of the previous session by 4.5 won. It reached a 13-year low on July 13, 2009.
