Asian stocks mostly fall as crude slides to $100 a barrel
Asian stocks were mostly down and oil prices fell on Tuesday after another day of losses on Wall Street, anxiety over the war in Ukraine and an upcoming Federal Reserve meeting on interest rates. keeping global financial markets on edge.
Markets remain confused as investors try to assess the various economic impacts of the war in Ukraine, upcoming rate hikes by central banks and new virus lockdowns in China. Tokyo rose while markets in China, Australia and South Korea fell.
Shares have fallen sharply in Hong Kong recently, falling to nearly six-year lows after neighboring Shenzhen was ordered to shut down to battle China’s worst COVID-19 outbreak in two years.
The Hang Seng index lost 2.4% on Tuesday morning to 19,068.49, while the Shanghai Composite fell 2.1% to 3,157.14.
Tokyo’s Nikkei 225 rose 0.3% to 25,385.11, while Seoul’s Kospi fell 0.6% to 2,630.34. Australia’s S&P/ASX 200 slipped 0.6% to 7,108.80 and shares also fell in Taiwan and Bangkok.
Oil prices fell, easing some inflationary pressure sweeping the world, with U.S. crude falling below $100 a barrel after hitting $130 last week.
U.S. crude fell $4.14 to $98.87 a barrel in electronic trading on the New York Mercantile Exchange. It fell from $6.32 to $103.01 on Monday.
Brent crude, the standard for international oil pricing, fell $3.90 to $103.00 a barrel.
Uncertainty over whether the global economy could be headed for a toxic combination of stagnant growth and persistently high inflation has led to a resumption of the pandemic in question, Russia’s invasion of Ukraine causing the prices of oil, wheat and other commodities produced in the region to skyrocket.
This has led to sharp day-to-day and hour-to-hour reversals in the markets as expectations of worsening inflation rise and fall.
“Markets seem to have tampered with a strange mix of hope, fear and uncertainty,” Mizuho Bank said in a comment.
On Monday, negotiators from Russia and Ukraine met via video conference for a new round of talks, after both sides expressed some optimism in recent days. The talks ended without a breakthrough after several hours. The negotiators took “a technical break”, said Ukrainian presidential aide Mykhailo Podolyak, and planned to meet again on Tuesday.
Investors were already worried before the start of the war because central banks around the world are preparing to end the stimulus measures they injected into the global economy after the outbreak of the pandemic.
Most people expect the Federal Reserve to raise its main short-term interest rate by a quarter of a percentage point on Wednesday. It would be the first increase since 2018, and it would take the federal funds rate down from its all-time high of near zero.
On Monday, the S&P 500 gave up an early gain and closed 0.7% lower at 4,173.11, while the Dow Jones Industrial Average was virtually unchanged at 32,945.24. The Nasdaq fell 2% to 12,581.22.
Shares of smaller companies also fell. The Russell 2000 Index slid 1.9% to 1,941.72.
The pullback came as the 10-year Treasury yield hit its highest level since the summer of 2019.
The 10-year Treasury yield climbed to 2.16% from 2.00% on Friday evening after hitting its highest level since July 2019. The two-year yield, which moves more on expectations of policy changes of the Fed, went from 1.75% to 1.86%. .
The Fed faces the challenge of raising rates just fast enough and high enough to fight inflation without overdoing it and causing a recession.
The war in Ukraine makes the balancing act even more difficult. He’s pushing inflation higher by raising the prices of everything from nickel to natural gas. And it threatens to stunt economic growth.
In currency trading, the dollar rose to 118.34 Japanese yen, its highest level in about six years, from 118.18 yen on Monday night. The dollar tends to serve as a safe haven in times of crisis, and the prospect of higher interest rates enhances its appeal to investors.
The weak yen is a boon for Japanese exporting manufacturers as it makes their products relatively cheaper and more competitive in overseas markets. Shares of Toyota Motor Corp. gained 2.5% early Tuesday,
The euro fell from $1.0941 to $1.0979.
AP Business Writers Stan Choe, Alex Veiga, and Damian J. Troise contributed.