Asian shares fall amid interest rate, earnings worries

TOKYO –

Asian shares dropped Monday after U.S. stocks fell last week. Global markets’ expectations of higher interest rates continued setting the tone.

Japan’s benchmark Nikkei 265 lost 1.9% in morning trade to 26,583.70. South Korea’s Kospi fell 1.6% to 2,661.94. Hong Kong’s Hang Seng fell 2.8%, to 20,064.32, while Shanghai Composite dropped 2.4%, to 3,012.93. Anzac Day is a national holiday in Australia and trading was not allowed.

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.

Analysts were reminded of the fragility of this situation by a notable performance from Marine Le Pen, a populist-nationalist contender. said. Le Pen promised to erode French ties with NATO, the EU and Germany and also spoke out against EU sanctions on Russian energy supply.

China’s rising COVID-19 numbers are raising concerns about a possible pandemic lockdown that could impede economic recovery in the region. COVID-19 is also affecting other countries, like Japan, which has no tourism revenue, although it slowly opens its borders to business travelers. However, cases continue to rise in China.

Investors are also monitoring profit reports from Japanese companies, which include big names like the Japanese. Many reports from U.S. businesses have already been published and have contributed to the decline that ended last week at Wall Street.

Investors’ attention is focused on what the U.S. Federal Reserve might do. The Federal Reserve chair has suggested that the central bank could raise short-term interest rates twice as much at its next meeting, which will be held in two weeks. The Fed already increased its overnight key rate one time, marking 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 lost 2.8% to 33.8111.40, the largest decline in 18-months. The Nasdaq fell 2.6% to close at 12,839.29. Both the Dow and Nasdaq posted losses this week.

Stocks of smaller companies also dropped sharply. The Russell 2000 fell 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,” saidYeap Jun Rong is a market strategist at IG Singapore.

The war in Ukraine is pushing up food, oil and gas prices and putting pressure on markets all over the world.

The benchmark U.S. crude fell to US$2.91 and $99.16 per barrel in energy trading. This was due to electronic trading on New York Mercantile Exchange. Brent crude, an international standard, dropped $2.93 to $103.72 per barrel.

Currency trading saw the U.S. Dollar fall to 128.51 Japanese Yoen, from 128.59 Yuen. The euro costs $1.0789, which is a decrease of $1.0803.