Asian stocks crash during war, inflation dominates markets
Stocks fell on Friday in Asia as uncertainty surrounding the war in Ukraine and continued high inflation maintain their grip on markets.
Hong Kong fell 3.6% and Tokyo 2.4%.
Investors are worried about how the global economy might fight off price pressures and slowing growth.
A plan to revoke Russia’s most favored nation trade status following its invasion of Ukraine has added to unease over the economic repercussions of the escalating conflict after talks between foreign ministers of the two countries showed no concrete progress.
President Joe Biden plans to announce the change on Friday, according to a source familiar with the matter who spoke on condition of anonymity to preview the announcement.
Pressure is mounting in Washington to revoke what is officially known as “permanent normal trade relations” with Russia, allowing the United States and its allies to impose tariffs on Russian imports.
Tokyo’s Nikkei 225 was down 625.66 points at 25,064.74 at noon and the Hang Seng in Hong Kong was down 751 points at 20,139.07.
The Shanghai Composite lost 1.8% to 3,237.46, while Seoul’s Kospi fell 1.1% to 2,652.58. In Australia, the S&P/ASX 200 fell 0.9% to 7,066.80. All other regional markets fell.
Stocks slid on Wall Street on Thursday in choppy trading as oil prices rebounded, with a barrel of U.S. crude jumping 5.7%, before ending down 2.5%. A day earlier, benchmarks hit their biggest gain since June 2020, when a slump in oil prices appeared to ease pressure on high global inflation.
The S&P 500 fell 0.4% to 4,259.52. The benchmark is now 11.2% below the all-time high it hit earlier this year. The Dow Jones Industrial Average fell 0.3% to 33,174.07, while the tech-heavy Nasdaq composite slipped 0.9% to 13,129.96.
Small company stocks held up better than the broader market. The Russell 2000 was down 0.2%, at 2,011.67.
Losses were widespread, with big tech companies among the most price-heavy. Chip and software companies collapsed. Micron Technology fell 4.7% and Advanced Micro Devices fell 4.1%
Amazon climbed 5.4% after announcing a 20-to-1 stock split and approving a buyback program of up to $10 billion of its stock.
Oil swings are just some of the waves rocking the markets. The European Central Bank said high inflation will push it to conclude its bond-buying program intended to stimulate its economy faster than expected. In the US, a report showed consumer prices jumped 7.9% in February from a year earlier. This is the largest spike since 1982, although the reading was largely in line with expectations.
Volatility has become the norm since Russia invaded Ukraine. This has raised concerns about rising prices for oil, wheat and other commodities produced in the region.
Investors were already nervous before the war as high inflation prompted central banks to raise interest rates for the first time since the start of the pandemic and to suspend programs launched to support the global economy.
Analysts said Thursday’s US inflation report was exactly what economists were expecting, and did not include the most recent spike in oil and gasoline prices after the invasion. of Ukraine by Russia. On the contrary, it may have offered some relief as it did not reach the 8% threshold that triggers the alarm.
Many investors said the report was unlikely to change anything for the Federal Reserve, which will meet next week to vote on interest rates. It is expected to raise its short-term policy rate by a quarter of a percentage point, which would be the first since 2018. Rising rates are slowing the economy, and the Fed is trying to raise them enough to curb inflation but not that much. that it causes a recession.
Oil prices have moderated since their wild swings earlier this week.
Benchmark U.S. crude added 9 cents to $106.11 a barrel after falling $2.68 to $106.02 a barrel on Thursday.
Brent crude, the basis for international prices, fell 28 cents to $109.05 a barrel.
So far, this oil and the benchmark US oil are up more than 40% for 2022, although they remain below highs reached earlier this week, when US oil briefly rose above $130.
The 10-year Treasury yield, which tracks expectations for inflation and economic growth, fell immediately after the release of the inflation report. It rose to 2% against 1.94% on Wednesday evening. Early Friday, it was at 1.97%.
The US dollar rose to 116.44 Japanese yen from 116.11 yen and the euro rose to $1.1001 from $1.0987.
AP Business Writers Damian J. Troise, Alex Veiga and Stan Choe contributed.