Asian stocks follow Wall Street down on rate hike, economy fears

BEIJING

Wall Street was lower Tuesday as investors feared that U.S. interest rate increases to counter inflation might slow down economic growth.

The market benchmarks for Australia, Hong Kong, South Korea, and Tokyo fell. Shanghai moved up. Although oil prices dropped more than US$1 per barrel, they remained above $100/barrel

Wall Street’s benchmark S&P 500 index tumbled 3.2% on Monday, hitting its lowest point in more than a year.

Investors worry that the Federal Reserve will try to reduce inflation, which is at its highest point in four decades. However, it is not trying to stop inflation from rising. This is in addition to Russia’s aggression on Ukraine and a Chinese slowdown.

Traders are pricing in the “impending deterioration of economic conditions,” saidYeap Jun Roong from IG in a Report

The Nikkei225 in Tokyo fell 0.8% to 26,117.76, and Hong Kong’s Hang Seng lost 2.8% to 19,436.73.

The Shanghai Composite Index rose 0.2% to 3,009.22, after the Chinese government announced new rent cuts and other support for small businesses as part of an effort to increase economic growth.

The Kospi in Seoul shed 0.7% to 3,593.12 and Sydney’s S&P-ASX 200 declined 1.2% to 7,034.90.

India’s Sensex rose 0.1% to 54,537.35. New Zealand’s and Southeast Asian markets fell.

On Wall Street, the S&P 500 sank to 3,991.24. That leaves Wall Street’s benchmark down 16.8% from its Jan. 3 record.

The Dow Jones Industrial Average dropped 2% to 32 245.70. The Nasdaq Composite fell 4.3%, to 11,623.25 due to tech stocks taking the brunt.

Energy stocks also declined. Marathon Oil and APA Corp. fell by more than 14%.

The Fed’s decision to stop pumping money into the financial sector, which had boosted prices, has led to stock losses.

The U.S. central banking has raised its key rates from near zero, where they sat for most of the coronavirus epidemic. It indicated last week that it would double the size of future increases compared to its normal margin.

Energy markets saw benchmark crude oil fall $1.15 to $101.94 a barrel in electronic trading on New York Mercantile Exchange. On Monday, the contract fell $6.68 to $103.09. Brent crude, which is used as a price basis in international oil trading, dropped $1.20 per barrel to $104.74 per barrel in London. It was $105.94 at the end of the previous session, down $6.45

The dollar gained 130.43 yen to 130.32 yen on Monday, compared with Monday’s 130.32. From $1.0566, the euro rose to $1.0576.