Asian stocks fall as investors await U.S. profits, inflation

BEIJING –

Tuesday’s fall in Asian stock markets was due to investors waiting for U.S. inflation data. Investors were worried about higher interest rates, Chinese efforts at containing coronavirus outbreaks, and Russia’s war against Ukraine.

Shanghai, Tokyo and Hong Kong all fell. Oil prices rose by more than US$2 per barrel

Wall Street’s benchmark S&P 500 index slid 1.7% on Monday as investors waited for a new round of corporate results to see how profits are affected by inflation that is at a four-decade high.

The Federal Reserve and other central banks’ plans to lower inflation by cutting ultra-low rates of interest are making the markets nervous. Anxiety has been increased by Russia’s attack against Ukraine and China closing down all businesses in Shanghai (its commercial capital) to combat coronavirus epidemics.

“Worries linger about the COVID-19 situation,”Anderson Alves from ActivTrades said in a report. “Markets are eyeing the situation in Ukraine for signs that could trigger further risk-off price action.”

The Shanghai Composite Index dropped 0.7% to 3,146.11 while the Nikkei 265 in Tokyo fell 1.4% to 26,451.13. The Hang Seng in Hong Kong fell 0.8% to 21,037.19.

The Kospi in Seoul gave up 1% to 2,665.46 and Sydney’s S&P-ASX 200 retreated 0.5% to 7,447.90.

While Jakarta advanced, New Zealand and other Southeast Asia market markets declined.

The U.S. Labor Department will report March consumer prices later Tuesday. Investors are concerned that inflation might be strong enough for consumers to reduce spending. This would likely lead to a sharper slowdown than expected in economic growth.

On Monday, the S&P 500 fell to 4,412.53 as all sectors in the index declined. The Dow Jones Industrial Average declined 1.2% to 34.308.08. The Nasdaq fell 2.2% to 13,411.96

Microsoft dropped 3.9%, while Apple lost 2.6%.

Investors expect a more aggressive shift by the Federal Reserve to curb rising inflation. Already, the central bank has announced a quarter-percentage points increase in its key interest rate.

Fed officials indicated in minutes from last month’s meeting they were considering raising the U.S. benchmark rate by double the normal amount at upcoming meetings. They also indicated they would shrink the Fed’s bond holdings, which would push up long-term borrowing rates.

Oil prices fell back due to lower Chinese demand. After most businesses in Shanghai were closed, and other industrial centres were subjected to controls to prevent coronavirus outbreaks, they have declined. Last month, prices rose to $130 per barrel due to fears about Russian supply disruptions.

China’s automakers and other manufacturers are cutting back production after authorities tightened restrictions in response to coronavirus outbreaks in Shanghai, Shanghai, and other cities.

In electronic trading on New York Mercantile Exchange, Benchmark U.S crude oil gained $1.92 to $96.21 a barrel. The contract dropped $3.97 to $94.29. Brent crude, which is the price basis for international oil trade, increased $1.83 to $100.31 a barrel in London. It dropped $4.30 to $98.48 from the previous session.

The dollar fell to 125.36 Japanese Yuan, compared to Monday’s 125.46. The euro dropped to $1.0876 from $1.0890.