Asian stocks start the week down, following the pullback from Wall St
Asian stocks opened mostly lower on Monday after a retreat on Wall Street boosted by disappointing economic data and corporate earnings. Oil prices also fell.
Investors are awaiting the next move from the US Federal Reserve, which is expected to raise its key rate again on Wednesday as it strives to bring inflation down.
The Fed will likely announce its second straight 0.75% increase in its short-term rate, a big increase it hasn’t otherwise implemented since 1994. This will put the Fed’s benchmark rate in a range of 2.25% to 2.5%. , the highest level since 2018.
The U.S. economy is slowing, but healthy hiring shows it’s not yet in a recession, Treasury Secretary Janet Yellen said on NBC’s “Meet the Press” program on Sunday. She spoke ahead of release this week on a series of economic reports that will shed light on an economy currently beleaguered by runaway inflation as interest rates rise.
The most high-profile report will likely be Thursday, when the Commerce Department releases its first estimate of economic output in the April-June quarter.
Some economists forecast that it could post a contraction for the second consecutive quarter. The economy shrank 1.6% in the January-March quarter. Two consecutive negative readings are considered an informal definition of a recession, although in this case economists believe it is misleading.
Similar data out of Europe underscored weakness in the global economy as central banks raise interest rates. Higher rates make economic conditions more difficult and overly aggressive hikes could trigger a recession.
“While rising jobless claims, falling home sales and accumulating gasoline inventories show that the Fed’s frontloading rate hikes are causing a slowdown and bringing inflation under control, the question is at what price,” Stephen Innes of SPI Asset Management said in a comment.
In Asia on Monday, Tokyo’s Nikkei 225 gained 0.8% to 27,678.94 and Seoul’s Kospi gained 0.3% to 2,400.38.
Hong Kong’s Hang Seng fell 0.7% to 20,465.69, while the Shanghai Composite Index fell 0.3% to 3,260.74.
In Australia, the S&P/ASX 200 edged down 0.1% to 6,784.00.
On Friday on Wall Street, the benchmark S&P 500 lost 0.9% to 3,961.63, snapping a three-day rally that had taken it to its highest level in six weeks.
The Dow Jones Industrial Average fell 0.4% to 31,899.29. It fared better largely because constituent American Express gave an encouraging earnings report and said its cardholders were spending more.
The Nasdaq fell 1.9% to 11,834.11 on worse-than-expected earnings reports from Snap, Seagate Technology and other tech-focused companies.
The company behind the Snapchat app fell 39.1% after reporting a worse loss and lower revenue for the spring than Wall Street had expected.
On Friday, the two-year Treasury yield fell again, to 2.98% from 3.09% on Thursday evening and from 3.14% a week ago, on worries about the economy. A report released Friday morning said business activity in the United States could contract for the first time in nearly two years, with service industries particularly weak.
Despite Friday’s declines on Wall Street, the S&P 500 still rose 2.5% over the week.
Besides the easing in Treasury yields over the week, lower prices for crude oil and other commodities also provided some relief on the inflation front, raising hopes that inflation could hit a low. peak.
Early Monday, the benchmark U.S. crude oil fell 64 cents to $94.06 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the pricing basis for international trade, fell 97 cents to $97.41 a barrel.
The dollar slipped to 136.13 Japanese yen from 136.27 yen on Friday. The Euro weakened to $1.0210 from $1.0214.