Asian stocks mostly fall after retirement on Wall Street | Economic news

By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) — Asian stocks fell in cautious trading on Wednesday after Wall Street stocks fell to a new low for the year.

Tokyo, Shanghai, Seoul and Sydney were down while Hong Kong rose slightly.

Tech stocks led the decline Tuesday on Wall Street. Rising coronavirus infections in Asia, linked to the spread of omicron, are worrying policymakers. Asian economies have suffered during the pandemic and are struggling to revive the recovery.

“The risky mood in global markets continues today in the Asian session, as market expectations continue for more aggressive Fed tightening amid fears that economic momentum may be capped,” he said. said Yeap Jun Rong, market strategist at IG. in Singapore.

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Japan’s benchmark Nikkei 225 fell 1.8% to 27,751.58. Australia’s S&P/ASX 200 fell 0.4% to 7,381.30. The South Korean Kospi was little changed, falling less than 0.1% to 2,864.01. Hong Kong’s Hang Seng gained 0.5% to 24,226.08, while the Shanghai Composite gained 0.1% to 3,574.37.

On Wall Street, losses for major indexes rose this month as rising inflation and the latest surge in the pandemic prompted investors to be cautious.

Heightened expectations of a rate hike by the Federal Reserve kept Treasury yields higher. The 10-year Treasury hit 1.87% on Tuesday, the highest since January 2020. It was at 1.77% on Friday evening.

Investors are now pricing in a greater than 86% chance that the Fed will raise short-term rates at its meeting of policymakers in March. A month ago, they saw less than a 47% chance of that happening, according to CME Group.

The S&P 500 fell 1.8% to 4,577.11, with about 90% of stocks in the benchmark closing in the red.

The Nasdaq, which is heavily weighted in technology stocks, slipped 2.6% to 14,506.90. The Dow Jones Industrial Average fell 1.5% to 35,368.47. Shares of small companies, a sign of confidence in economic growth, also lost ground. The Russell 2000 Index fell 3.1% to 2,096.23.

The Nasdaq bore the brunt of the losses this month, shedding 7.3%. That puts the index within 2.7% of a correction, Wall Street speaks of when a stock or index falls 10% or more from its last high. The S&P 500 is down nearly 4% for the month after hitting an all-time high on the first trading day of the year.

The 10-year yield “continues to climb painfully, under an increasingly aggressive Federal Reserve,” said Ross Mayfield, investment strategy analyst at Baird. “Until last weekend, I hadn’t seen any speculation of two rate hikes at the March meeting, and now you’re starting to hear that chatter.”

The Fed is under pressure to reduce inflation, which surged last month at its fastest pace in nearly 40 years. At the same time, the job market has rebounded, leaving the unemployment rate at a pandemic low of 3.9% last month. This gives the central bank more leeway to contain the unprecedented support it has been providing to the economy since the start of the pandemic.

Higher rates could help stem inflation, but would also signal an end to the conditions that have put markets in “easy mode” for many investors since the start of 2020.

Higher rates also make stocks of high-flying tech companies and other expensive growth stocks less attractive. The sector was the biggest drag on the S&P on Tuesday. Apple fell 1.9% and chipmaker Nvidia fell 3.9%.

Banks also weighed heavily on the market after Goldman Sachs said its fourth-quarter profit fell 13% from a year earlier, largely due to the high salaries Goldman pays to staff. Goldman’s results echoed those of JPMorgan and Wells Fargo last week, which also reported lower profits and higher expenses due to higher employee compensation costs.

Goldman shares fell 7%, while JPMorgan fell 4.2%. Wells Fargo was down 2.4%.

Investors returning after U.S. markets closed Monday for the Martin Luther King Jr. Day holiday also reviewed the latest batch of corporate earnings and deal news. Activision Blizzard jumped 25.9% on news of a blockbuster deal. Microsoft, which fell 2.4%, is buying the maker of games like “Call of Duty” and “Candy Crush” for $68.7 billion.

Bank of America, UnitedHealth and United Airlines report their results on Wednesday. Results from American Airlines, Union Pacific and Netflix are due Thursday.

In energy trading, benchmark U.S. crude added $1.10 to $85.93 a barrel in electronic trading on the New York Mercantile Exchange. The price of U.S. crude oil ended Tuesday up 1.9% at $84.83 a barrel, a 7-year high. Brent, the international standard, rose $1.03 to $88.54 a barrel.

In currency trading, the US dollar fell to 114.58 Japanese yen from 114.61 yen. The euro remained unchanged at $1.1327.

AP Business Writers Damian J. Troise and Alex Veiga contributed.

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