Asian shares mostly lower, tracking Wall Street retreat
Shares were mostly lower Wednesday in Asia after Wall Street benchmarks retreated following the S&P 500’s rise to its highest level since the spring of last year.
image for illustrative purpose
Bangkok: Shares were mostly lower Wednesday in Asia after Wall Street benchmarks retreated following the S&P 500’s rise to its highest level since the spring of last year.
U.S. futures were little changed and oil prices rose. Tokyo’s Nikkei 225 edged 0.1 per cent higher to 33,427.14, while the Hang Seng in Hong Kong sank 1.5 per cent to 19,607.08. The Shanghai Composite index gave up 0.5 per cent to 3,240.36 and the Kospi in Seoul slipped 0.4 per cent to 2,594.19. In Australia, the S&P/ASX 200 shed 0.2 per cent to 7,345.30. This week has few potentially market-moving events. Federal Reserve Chair Jerome Powell will testify before Congress on Wednesday and Thursday.
Last week, the Fed held its benchmark lending rate steady, the first time in more than a year that it didn’t announce an increase. But it also warned it could raise rates twice more this year. The Bank of England will meet on interest-rate policy Thursday. Central banks around the world are heading in diverging directions as they battle inflation amid worries about a pressured global economy. “Investors are turning cautious ahead of another hefty dose of Fedspeak amidst a relatively light data docket,” Stephen Innes of SPI Asset Management said in a commentary. He added that “with central banks in the mood to dish out inflation pain these days, investors may need to see some positive inflation data convergence to narrow the wide disparity between the Federal Reserve and the market’s forward inflation expectations before breaking fresh higher ground on U.S. stocks.”
On Tuesday as US markets reopened after being closed in observance of the Juneteenth holiday, the S&P 500 fell 0.5 per cent to 4,388.71. The Dow Jones Industrial Average dropped 0.7 per cent to 34,053.87, and the Nasdaq composite lost 0.2 per cent, to 13,667.29. The U.S. stock market took a step back following many steps forward on hopes the economy can avoid a recession and inflation is easing enough for the Fed to stop raising interest rates soon. Frenzy around artificial intelligence has also vaulted a select group of tech stocks to huge gains. Those hopes are battling against worries that the Fed will keep interest rates high for longer, which could grind down the economy. Some of the easiest improvements in year-over-year inflation will soon be passed, bringing tougher times for both the economy and financial markets. During the 70s, inflation remained high for much longer than hoped, forcing the Fed to ultimately drive the economy into a painful recession. In China, meanwhile, the world’s second-largest economy is stumbling in its recovery following the relaxation of anti-Covid restrictions. Most of Wall Street fell, with four out of five stocks in S&P 500 lower.
Worries about the global economy dragged lower prices for crude oil and the stocks of companies that pull it from the ground. Energy stocks fell 2.3 per cent for the largest loss among the 11 sectors that make up the S&P 500. Exxon Mobil fell 2.3per cent, and Chevron lost 2.3per cent. Ball Corp., which makes aluminum cans and other products, dropped 4.2per cent. It said Tuesday that it’s considering options for its aerospace business but that “there is no certainty that any formal decision will be made.” Its stock had jumped 7.2per cent Friday following a report that it was looking to sell the unit. On the winning side was Dice Therapeutics, which soared 37.2per cent after Eli Lilly said it would buy the biopharmaceutical company for $2.4 billion in cash. Lilly added 0.9per cent.
