Asian shares fall amid interest rate, earnings worries
Asian shares declined Monday after U.S. stocks ended last week with a tumble as global markets’ expectations for higher interest rates dominated investor concerns.
Japan’s benchmark Nikkei 225 lost 1.9% to finish at 26,590.78. South Korea’s Kospi slipped 1.6% to 2,661.59. Hong Kong’s Hang Seng dropped 3.3% to 19,954.32, while the Shanghai Composite shed 3.7% to 2,972.62. Trading was closed in Australia for Anzac Day, a national holiday.
The news that Emmanuel Macron won the run-off French presidential election over the weekend, clinching a second term as was widely expected, reassured markets that France won’t abruptly shift course in the midst of the war in Ukraine.
But a significant show from contender Marine Le Pen, a populist and nationalist, served as a reminder of how fragile that situation might be, analysts said. Le Pen pledged to dilute French ties with the EU, NATO and Germany, and spoke out against EU sanctions on Russian energy supplies.
Rising COVID-19 cases in China are setting off worries about more pandemic lockdowns that would crimp economic recoveries in the region. Other nations are also dealing with economic woes related to COVID-19, such as the absence of tourism revenue in Japan, where cases are still going up and down while it gradually opens its borders, but only to business travelers.
Investors are also watching profit reports from companies, including Japanese big names that are coming in weeks ahead. Several reports from U.S. companies, which have already been released, have been disappointing, contributing to the fall that ended last week on Wall Street.
What the U.S. Federal Reserve might do is high on investors’ minds. The chair of the Federal Reserve has indicated the central bank may hike short-term interest rates by double the usual amount at upcoming meetings, starting in two weeks. The Fed has already raised its key overnight rate once, the first such increase since 2018.
The S&P; 500 fell 2.8% Friday to 4,271.78, marking its third losing week in a row. The Dow dropped 2.8% to 33,811.40, its biggest drop in 18 months. The Nasdaq lost 2.6%, closing at 12,839.29. The Dow and Nasdaq also posted losses for the week.
Smaller company stocks also fell sharply. The Russell 2000 slid 2.6% to 1,940.66.
“Coming after the heavy sell-off in Wall Street to end last week, overall risk appetite in the region may come under pressure as well,” said Yeap Jun Rong, market strategist at IG in Singapore.
Markets around the world are feeling similar pressure on rates and inflation, particularly in Europe as the war in Ukraine pushes up oil, gas and food costs.
In energy trading, benchmark U.S. crude lost $3.40 to $98.67 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell $3.50 to $103.15 a barrel.
In currency trading, the U.S. dollar edged down to 128.39 Japanese yen from 128.59 yen. The euro cost $1.0735, down from $1.0803.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama