Asian stock markets extended their losses on Tuesday amid pessimism about weaker global economic growth as central banks raise interest rates to cool inflation.
Shanghai, Tokyo, Hong Kong and Sydney decreased. Oil prices rose.
Markets are falling after the US Federal Reserve raised its key lending rate last week and the European Central Bank said more rate hikes are on the way. That fueled investor fears that central bankers might be willing to trigger a recession to combat inflation that is at multi-decade highs.
Wall Street fell for a fifth day Monday after the Fed said last week that rates may have to stay raised longer than previously anticipated.
“The tone of the markets reflects a cloudy outlook for the global economy,” Anderson Alves of ActivTrades said in a report.
The Shanghai Composite Index lost 0.6% to 3,087.32 after the World Bank cut its forecast for China’s economic growth this year to 2.7% from its June outlook of 4.3%. The bank cited repeated closures of major cities to combat COVID-19 outbreaks.
Tokyo’s Nikkei 225 fell 2.4% to 26,575.04 after Japan’s central bank, which has avoided joining the Fed and other central banks in raising rates, widened the range in which it will allow rates to fluctuate. government bond yields. That will allow market interest rates to rise.
Hong Kong’s Hang Seng sank 1.4% to 19,089.96 and Seoul’s Kospi lost 0.7% to 2,334.05.
Sydney’s S&P-ASX 200 fell 1.5% to 7,028.40 while India’s Sensex opened 0.8% to 61,806.19. The New Zealand and Southeast Asian markets fell back.
Wall Street’s benchmark S&P 500 index fell 0.9% to 3,817.66. The index is down 20% this year with less than two weeks to go until 2022.
The Dow Jones Industrial Average fell 0.5% to 32,757.54. The Nasdaq Composite lost 1.5% to 10,546.03.
Shares of communications services, technology companies and retailers all fell. Disney fell 4.8%, Microsoft fell 1.7% and Home Depot fell a lesser 1.9%.
Facebook’s parent company fell 4.1% after the European Union accused the company of violating antitrust rules by distorting competition in the online classifieds business.
The Fed raised its short-term loan rate last week by half a percentage for its seventh increase this year.
The federal funds rate is at a 15-year high in a range of 4.25% to 4.5%. The Fed forecasts that it will reach a range of 5% to 5.25% by the end of 2023. The forecast does not call for a cut before 2024.
Investors were looking forward to this week’s US economic reports for an update on the path of inflation. It has declined from its peak of 9.1% in June, but still held at 7.1% in November.
The National Association of Realtors reports November home sales on Wednesday. Also on Wednesday, the Conference Board releases its December consumer confidence report.
On Friday, the government will report consumer spending for November. The Fed views the report as a barometer of inflation.
In energy markets, benchmark US crude gained 30 cents to $75.68 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trade, rose 20 cents to $80 a barrel in London.
The dollar fell to 133.29 yen from 136.99 yen on Monday. The euro was stable at $1.0604.