Asian Shares Mostly Lower On Recession Fears
Asian stocks ended mostly lower on Tuesday after Wall Street entered the bear market on fears that aggressive rate tightening by the Federal Reserve would push the world’s largest economy into recession.
With inflation running well ahead of the Fed’s 2 percent goal, investors wonder whether the U.S. central bank will announce a bigger rate move during the two-day meeting that concludes Wednesday.
Goldman Sachs and JPMorgan Chase & Co. said they expect the Fed to raise interest rates by 75 basis points at their meeting on Wednesday.
Regional stocks ended off their lows, with some markets reversing course as U.S. stock futures pointed to a rebound on Wall Street later in the day.
China’s Shanghai Composite index ended up 1.02 percent at 3,288.91, reversing an early slide. Hong Kong’s Hang Seng index also reversed early losses to finish marginally higher at 21,067.99.
Japanese shares fell sharply as inflation worries persisted and the reimposition of restrictions in Beijing, Shanghai and other places sparked worries of new supply chain disruptions.
The Nikkei average slid 1.32 percent to 26,629.86, falling for a third day as investors weighed risks to growth. The benchmark index sank nearly 2.2 percent earlier, touching the lowest since May 19. The broader Topix index closed 1.19 percent lower at 1,878.45 with tech, travel, healthcare and real estate stocks falling the most. Heavyweight SoftBank Group lost 2.6 percent.
Seoul stocks extended losses for the sixth day running and hit a fresh 19-month low on rate hike woes. The Kospi average dropped 0.46 percent to 2,492.97 after hitting a low of 2,457.39 at one point.
Major battery maker LG Energy Solution bucked the weak trend to close 2.8 percent higher after the company announced the plan to build a new plant in South Korea for the 4680 battery cells known for their wide use by Tesla Inc.
Australian stocks led regional losses as local markets played catch-up with the losses internationally on Friday and Monday.
The benchmark S&P/ASX 200 index fell 3.55 percent to 6,686, marking its lowest level since Feb. 26, 2021 as investors awaited the outcome of Wednesday’s Fed meeting.
Losses were seen across sectors, with tech stocks such as Zip Co and Block plunging 15-16 percent. Lower iron ore prices weighed on the mining sector, with BHP, Rio Tinto and Fortescue Metals losing 4-8 percent.
New Zealand shares tumbled, with the benchmark S&P/NZX 50 closing down 2.59 percent at 10,641.36.
U.S. stocks plunged into a bear market on Monday and government bond yields soared as investors continued to fret over stubbornly high inflation and the prospect of aggressive monetary tightening by central banks.
The Dow tumbled 2.8 percent, the tech-heavy Nasdaq Composite plummeted 4.7 percent and the S&P 500 gave up 3.9 percent to reach their lowest closing levels in over a year.
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