BEIJING – Asian stock markets extended losses on Tuesday amid the gloom over weaker global economic growth as central banks hike interest rates to cool inflation.
Markets are slipping after the US Federal Reserve hiked interest rates last week and the European Central Bank said more rate hikes are imminent. That fueled investor fears that central bankers might be poised to trigger a recession to combat inflation, which is at multi-decade highs.
Wall Street declined for a fifth day on Monday after the Fed said last week that interest rates would stay longer than previously forecast.
“The tone in the markets reflects a gloomy outlook for the global economy,” ActivTrades’ Anderson Alves said in a report.
The Shanghai Composite Index SHCOMP, -0.64%, shed 0.6% after the World Bank cut its forecast for China’s economic growth this year to 2.7% from 4.3% in June. The bank led repeated shutdowns of major cities to combat outbreaks of COVID-19.
The Hang Seng HSI, -1.36% in Hong Kong, slipped 1.4%, while the Nikkei 225 NIK, -2.52% in Tokyo, slipped 2.7% after the Bank of Japan surprisingly hiked a benchmark interest rate and let the yen soar .
Seoul’s Kospi 180721, -0.88% shed 0.6% and Sydney’s S&P/ASX 200 XJO, -1.47% shed 1.4%. New Zealand’s NZ50GR, -0.98% and Southeast Asian Markets STI, -0.35% FBMKLCI, -0.38% JAKIDX, -0.75% also declined.
Wall Street’s benchmark S&P 500 index, the SPX, was down -0.90%, down 0.9% to 3,817.66. The index is down about 20% this year with less than two weeks left in 2022.
The Dow Jones Industrial Average DJIA, -0.49%, fell 0.5% to 32,757.54. The Nasdaq Composite COMP, -1.49%, shed 1.5% to 10,546.03.
The Fed raised its short-term interest rate by half a percentage point last week, in its seventh hike this year.
The federal funds rate is at a 15-year high between 4.25% and 4.5%. The Fed forecast that will reach a range of 5% to 5.25% by the end of 2023. The forecast does not envisage a reduction before 2024.
Investors awaited US economic reports this week for an update on the inflation path. It has fallen from its high of 9.1% in June but was still at 7.1% in November.
The National Association of Realtors reports November home sales on Wednesday. Also on Wednesday, the Conference Board will release its December consumer confidence report.
On Friday, the government will report on consumer spending in November. The report is viewed by the Fed as an inflation barometer.
In energy markets, benchmark US crude CLF23, +0.25% was up 85 cents in electronic trading on the New York Mercantile Exchange to $76.23 a barrel. Brent crude BRNG23, +0.11%,
the price basis for international oil trading, rose 77 cents in London to $80.57 a barrel.
The dollar USDJPY fell -2.67% to 133.45 yen from 136.99 yen on Monday.
MarketWatch contributed to this report.
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