Global shares fall amid interest rate, earnings worries

TOKYO

Monday’s decline in European stocks was a continuation of losses in Asia, as investors worried about interest rate increases dominated.

The Shanghai Composite index dropped 5.1% while Hong Kong fell 3.7%. This was due to China’s strict pandemic policies and rising case numbers.

Oil prices fell more than US$4/barrel, while the U.S. Dollar was trading at 128 Japanese yen.

France’s CAC 40 fell 2.0% in early trading, to 6,451.27.

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 Marine Le Pen’s significant performance as a populist-nationalist contender. said. Le Pen pledged to erode French ties with NATO, the EU and Germany and he spoke out against EU sanctions regarding Russian energy supplies.

Germany’s DAX lost 1.4% to 13,943.88. Britain’s FTSE 100 shed 2.2% to 7,354.94. The future for the Dow industrials was down 0.7% while that for the S&P 500 fell 0.8%.

In Asian trading, Japan’s benchmark Nikkei 225 lost 1.9% to finish at 26,590.78. South Korea’s Kospi slipped 1.8% to 2,657.13. Hong Kong’s Hang Seng dropped 770 points to 19,869.34, while the Shanghai Composite shed 158 points to 2,928.51, dipping below 3,000 for the first time since July 2020.

Hong Kong-traded shares of Internet company Baidu fell 7% while PetroChina lost 4.4% due to falling oil prices.

“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 Roong, market strategist at IG Singapore.

China’s rising COVID-19 numbers are raising concerns about pandemic lockdowns, which could impede economic recovery in the region. After rising case numbers, Beijing placed lockdowns across several districts.

Investors also monitor profit reports from companies, even big Japanese names, that will be released in the coming weeks. A number of reports from U.S. firms have already been released and they have been disappointing. This has contributed to the fall last week on 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.

As the war in Ukraine drives up oil, gas, and food prices, markets around the globe are experiencing similar pressures on rates and inflation.

The benchmark U.S. crude fell to $4.71 and $97.36 per barrel in energy trading. This was due to electronic trading on New York Mercantile Exchange. Brent crude oil, which is the international standard fell 4.86 to $101.29/barrel.

Currency trading saw the U.S. Dollar fall to 128.11 Japanese Yoen, down from 128.59 Yuen. The euro was $1.07444, a decrease of $1.0803.