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Saturday, August 20, 2022
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Saturday, August 20, 2022
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    Asian shares sink after inflation-driven retreat on Wall Street

    BANGKOK (AP) – Shares sank in yesterday after a report that United States (US) inflation worsened last month sent stocks reeling on Wall Street.

    Major regional markets dropped more than two per cent in early trading yesterday, while US futures slipped more than one per cent. On Friday, the S&P 500 sank 2.9 per cent, locking in its ninth losing week in the last 10.

    Investors had hoped the highly anticipated consumer price report would show the worst inflation in generations had slowed a touch last month, passing its peak. Instead, the United States (US) government said inflation accelerated to 8.6 per cent in May from 8.3 per cent the month before.

    Investors took Friday’s report to suggest the Federal Reserve will persist in raising interest rates and making other moves in order to slow the economy, to try to force down inflation.

    Tokyo’s Nikkei 225 index lost 2.6 per cent to 27,018.01 and the Hang Seng in Hong Kong skidded three per cent to 21,145.27. In South Korea, the Kospi declined 3.18 per cent to 2,516.95 as a truckers strike raised concern over supply chain disruptions. The Shanghai Composite index dropped one per cent to 3,253.04.

    Thailand’s benchmark fell 1.4 per cent, and markets in Australia were closed for a holiday.

    Regional concerns have also been weighing on sentiment, as China combats more outbreaks of coronavirus after easing some precautions in recent weeks.

    A man rides past an electronic stock board showing Japan’s Nikkei 225 and New York Dow indexes at a securities firm in Tokyo. PHOTO: AP

    That means “previous optimism surrounding China’s re-opening may also take a pause, as the resumption of mass-testing in Beijing and Shanghai seems to place Covid-19 risks at the forefront once again,” Jun Rong Yeap of IG said in a commentary. On Friday, the S&P 500 shed 117 points to 3,900.86 and tumbling bond prices sent Treasury yields to their highest levels in years. The Dow Jones Industrial Average lost 2.7 per cent to 31,392.79, and the Nasdaq composite dropped 3.5 per cent to 11,340.02.

    The growing expectation is for the Fed to raise its key short-term interest rate by half a per centage point at each of its next three meetings, beginning next week. Only once since 2000 has the Fed raised rates by that much, last month.

    Surging prices and expectations about Fed policy have sent the two-year Treasury yield to its highest level since 2008 and the S&P 500 down 18.7 per cent from its record set in early January. High-growth technology stocks, cryptocurrencies and other big winners of the pandemic’s earlier days have been hurting the most, but the damage is broadening as retailers and others warn about upcoming profits.

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