Asian Stocks Fall Ahead of US Inflation

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Author: Geo Wright

U.S inflation and a few other external influences are driving the prices of Asian stocks to the ground. With analysts and some data telling us to expect more interest rate hikes, thus more pressure on prices, you must be wondering what the future holds.

So, this guide will be covering the recent fall in Asian stocks and the reasons behind the trend. 

Asian Stocks Fall Ahead of U.S. Inflation

Asian stocks fell ahead of the troubling U.S. inflation that’s making traders worry about an upwards pressure on prices. 

Many people believe that these high prices won’t be easily cooled off by the Federal Reserve’s interest rate hike.

During this period, Hong Kong, Shanghai, Seoul, and Tokyo declined, while oil prices fell.

The S$P 500 index also lost 0.4%, which extended its daily decline to four days straight after some disappointing earnings reports.

Wednesday’s report is expected to show a little relief from the four-decade inflation high of 9.1%. 

However, a FactSet survey found that traders are expecting “core inflation”, which removes volatile energy and food costs, while rent and other expenses remain high.

Investors worry that the efforts to cool inflation from the Federal Reserve and various central banks in Asia and Europe may derail the global economy’s growth.

According to Tan Boon Heng from Mizuho Bank, anything over 8% is far too high for the Federal Reserve, and the fight to handle inflation isn’t close to being over.

Wall Street’s S&P 500 dropped to 4,122.47 as traders awaited more data on how much more the Fed is willing to hike interest rates.

In 2022 alone, the Federal Reserve has raised the rates four times. Within this period, the interest rate was increased by 0.75% points, which is three times the usual margin.

 In addition, Investors are expecting another 0.75% hike soon after last week’s data revealed that hiring performed better than expected.

Federal Reserve officials have expressed concern that it will be unsafe for the U.S. economy to eneter recession. 

However, some have pointed to a strong job market as a sign that the country can tolerate a few more rate hikes.

Adding to the list of stocks that fell, The Dow Dropped 0.2% and closed at 32,774.41. Nasdaq fell 1.2% and closed at 12,493.93. 

Also, The Russel 2000 closed at 1,912.89 after dropping by 1.5%.

Chipmakers weren’t left out as Micron Technology slipped 3.7% after the company warned investors of weakening demand that could negatively affect revenue. Nvidia (another chipmaker) plunged 4%.

The Norwegian Cruise line fell 10.6%, which marked the largest drop in the S&P 500 following disappointing results and a forecast showing weak revenue. Additionally, American Airlines and Expedia fell by 2.7% and 1.6% respectively.

Russia’s ongoing war in Ukraine is significantly affecting markets and is causing spikes in the prices of wheat, oil, and other essential commodities. Also, the anti-virus measures in China are disrupting manufacturing and trade.

In the energy market, the benchmark U.S crude oil lost 30 cents and fell to $90.20 per barrel in e-trading on New York Mercantile Exchange. As of Tuesday, the price dropped 26 cents to $90.50. 

In London, Brent crude oil ( a price basis used for international trading) fell 25 cents to land at $96.06 per barrel, which followed an earlier decline that saw it lose 34 cents and drop to $96.31.

The dollar fell to 135.02 yen compared to Tuesday’s 135.1, as the euro rose from $1.0205 to $1.0215.

Conclusion

Lately, stocks have been significantly affected by rising inflation, the war in Ukraine, and the lockdowns in China. As a result, many stocks in Asia and Europe have either fallen or are struggling to stay up.

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