Joe McDonald
BEIJING (AP) – Asian stock markets were mixed yesterday after Wall Street edged lower amid fears higher interest rates will chill global economic growth.
Shanghai and Hong Kong advanced, while Tokyo and Seoul declined. Oil prices fell more than USD2 per barrel to near USD100.
Federal Reserve Chair Jerome Powell, talking to members of Congress, said on Wednesday that while the United States (US) central bank doesn’t need to “provoke a recession”, one is a possibility due to rate hikes to cool inflation that is running at four-decade highs.
Wall Street’s benchmark S&P 500 index lost 0.1 per cent after swinging between a gain of one per cent and a loss of 1.3 per cent during the day.
“The market now accepts recession is a risk, having been in total denial,” Michael Every of Rabobank said in a report.
The Shanghai Composite Index rose 0.6 per cent to 3,285.99 while the Nikkei 225 in Tokyo sank 0.3 per cent to 26,059.39. The Hang Seng in Hong Kong gained one per cent to 21,209.09.
The Kospi in Seoul retreated 1.5 per cent to 2,308.20 while Sydney’s S&P-ASX 200 rose 0.2 per cent to 6,523.50. New Zealand, Bangkok and Singapore advanced while Jakarta fell.
Central banks in the United Sates (US) and Europe are trying to stop inflation that is running at four-decade highs.
Investors worry that will derail global growth. Powell, speaking before the Senate Banking Committee, acknowledged the risks but said it is “absolutely essential” that the Fed restore stable prices.
“We now anticipate the most aggressive and synchronised tightening cycle” by global central banks since the 1980s, said Jennifer McKeown of Capital Economics in a report. “The key question now is not whether central banks will slam on the brakes, but what might stop them?”
The S&P 500 declined to 3,759.89. Stocks in the index were evenly split between gainers and decliners.
The Dow Jones Industrial Average gave up 0.2 per cent to 30,483.13. The Nasdaq composite slipped 0.2 per cent to 11,053.08.
The S&P 500 is in a bear market, or down more than 20 per cent from its January 3 peak. It has fallen in 10 of the past 11 weeks.
Last week, the Fed raised its benchmark rate by three quarters of a percentage point, three times its usual margin and the biggest increase in nearly three decades.
Fed policymakers said they anticipate more rate hikes this year and next and at a quicker tempo than previously forecast. They said the central bank’s key rate should reach 3.8 per cent by the end of 2023, its highest level in 15 years.
Surging prices have soured consumer sentiment in the US, the world’s biggest market. Retail spending is sagging.
Inflation fears have been aggravated by a spike in prices of oil, wheat and other commodities due to Russia’s attack on Ukraine.
Oil prices fell sharply for a second on Wednesday, suggesting traders anticipate weaker demand as economic activity cools.
Benchmark US crude tumbled USD2.68 to USD103.51 per barrel in electronic trading on the New York Mercantile Exchange. The contract declined USD3.33 on Wednesday to USD106.19. Brent crude, the price basis for international trading, retreated USD2.43 to USD106.22 per barrel in London. It sank USD3.12 the previous session to USD108.65.
The dollar fell to JPY135.34 from Wednesday’s JPY136.28. The euro rose to USD1.0570 from USD1.0566.
