Subsidence of Asian stocks after inflation-led recession on Wall Street

Bangkok, June 13: Stocks fell in Asia on Monday after reports of worsening US inflation rolled up on Wall Street. Major regional markets fell more than 2% in early Monday trading, while US futures fell more than 1%. On Friday, the S & P 500 fell 2.9%, marking its ninth week of defeat in the last 10 weeks.

Investors were hoping that the long-awaited consumer price index had peaked at the worst inflation rate of last month’s generation. Instead, the US government said inflation accelerated from 8.3% last month to 8.6% in May. Pakistan’s stock market plunges, making it the third worst-performing stock exchange in Asia, losing more than 1.35 trillion PKR to investors.

Investors took a report on Friday, suggesting that the Federal Reserve will continue to move up, including raising interest rates to slow the economy to push inflation down.

The Nikkei 225 index in Tokyo fell 2.6% to 27,018.01, and the Hang Seng index in Hong Kong fell 3% to 21,145.27. In South Korea, Kospi fell 3.18% to 2,516.95 as truck driver strikes raised concerns about supply chain disruptions. The Shanghai Composite Index fell 1% to 3,253.04.

The Thai benchmark fell 1.4% and the Australian market was closed due to vacation. Local concerns also weigh heavily on emotions as China fights more outbreaks of the coronavirus after mitigating some precautions in the last few weeks.

This means that “previous optimism over China’s reopening could also be suspended. Resuming group testing in Beijing and Shanghai will put Covid-19 risk at the forefront again. That seems to be the case, “said IG’s Jun Rong Yeap in a comment.

On Friday, the S & P 500 fell 117 points to 3,900.86, with bond prices plunging and Treasury yields hit record highs. The Dow Jones Industrial Average fell 2.7% to 31,392.79, and the Nasdaq Composite Index fell 3.5% to 11,340.02.

High expectations are that the Fed will raise key short-term interest rates by 0.5 percentage points at each of the next three meetings starting next week. Last month, the Fed raised interest rates that much only once since 2000.

Soaring prices and expectations of the Fed’s policies have led Treasury yields to their highest level since 2008, with the S & P 500 down 18.7% from a record set in early January. Fast-growing tech stocks, cryptocurrencies, and other big winners in the early days of the pandemic have hit hardest, but as retailers and others warn about future profits, the damage grows. I am.

Record low interest rates designed by the Federal Reserve and other central banks have helped keep investment prices high. Currently, “Easy Mode” for investors is turned off. Higher interest rates could drive the Fed into recession as borrowing goes up and spending and investment by households and businesses goes down.

Investors are also concerned that food and fuel costs could continue to skyrocket, no matter how aggressive the FRB moves, partly due to the crisis in Ukraine, the world’s major breadbasket.

Another report on Friday showed that consumer sentiment was worse than economists expected. Much of the sourness in the University of Michigan’s preliminary reading was due to rising gasoline prices.

(This is an edited and auto-generated story from the Syndicated News Feed. LatestLY staff may not have changed or edited the content body)