BEIJING (AP) – Asian stock markets followed Wall Street lower yesterday as traders prepared for a possible sharp interest rate hike by the Federal Reserve to cool inflation.
Shanghai, Hong Kong and South Korea declined. Tokyo and Sydney advanced. Oil prices were little changed, staying below USD100 per barrel.
Wall Street tumbled on Tuesday after Walmart warned that inflation that has spiked to a four-decade high of 9.1 per cent is hurting American consumer spending.
Investors worry aggressive action against inflation by the Fed and central banks in Europe and Asia might derail global economic growth.
The Fed is expected to announce a rate hike of up to three-quarters of a percentage point, triple its usual margin.
That would match a similar increase last month, the United States (US) central bank’s biggest in 28 years.
“The main risk at this stage is in fact an inflation ‘overkill’ with monetary tightening too abrupt, unnecessarily pushing up the unemployment rate,” Thomas Costerg of Pictet Wealth Management said in a report. Costerg said most economic indicators and lower commodity prices already point to slower inflation ahead.
The Shanghai Composite Index lost 0.1 per cent to 3,274.37 while Tokyo’s Nikkei 225 advanced 0.3 per cent to 27,728.93. The Hang Seng in Hong Kong sank 1.5 per cent to 20,590.46.
The Kospi in Seoul retreated 0.4 per cent to 2,401.78 and Sydney’s S&P-ASX 200 gained 0.1 per cent to 6,814.00.
India’s Sensex opened up 0.3 per cent at 55,418.55. New Zealand, Bangkok and Jakarta advanced while Singapore declined.
On Wall Street, the benchmark S&P 500 index fell 1.2 per cent to 3,921.05. The Dow Jones Industrial Average dropped 0.7 per cent to 31,761.54. The Nasdaq composite closed 1.9 per cent lower at 11,562.57.
Walmart slumped 7.6 per cent after the retail giant cut its profit outlook for the second quarter and the full year on Tuesday. It said rising prices for food and gasoline are forcing shoppers to cut back on more profitable discretionary items, particularly clothing.
The retailer’s profit warning in the middle of the quarter is rare and raised worries about how the highest inflation in 40 years is affecting the entire retail sector.
Other major chains also fell. Target dropped 3.6 per cent, Macy’s slid 7.2 per cent and Kohl’s fell 9.1 per cent.
Tech stocks retreated. Microsoft fell 2.7 per cent, Amazon slid 5.2 per cent and Facebook owner Meta Platforms dropped 4.5 per cent.
General Motors fell 3.4 per cent after its second-quarter profit fell 40 per cent from a year ago. US sales fell 15 per cent after shortages of processor chips and other components left the company unable to deliver 95,000 vehicles during the quarter.
In energy markets, benchmark US crude rose USD0.32 to USD95.30 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell USD1.72 on Tuesday to USD94.98. Brent crude, the price basis for international oils, added USD0.06 to USD99.52 per barrel in London.
The dollar rose to JPY137.01 from Tuesday’s JPY136.00. The euro gained to USD1.0151 from USD1.0120.