BEIJING ( Associated Press) – Asian stock markets fell by unusually wide margins on Thursday after the Federal Reserve indicated plans to start raising interest rates soon to quell inflation.
Tokyo’s market benchmark fell more than 3%. Hong Kong and Seoul fell more than 2%.
Wall Street’s benchmark S&P 500 index fell 0.1% on Wednesday following a statement from the Fed that said the US central bank “expects it will be appropriate soon” to raise rates. Investors expect four rate hikes starting March this year. The Fed said monthly bond purchases that push down long-term rates by injecting money into the financial system will be phased out in March.
“The Fed’s decision will resonate globally, which means the era of low interest rate, ultra-low interest rates is over,” said Francis Lun, CEO of Jio Securities in Hong Kong. “All central banks would rather start fighting inflation than try to stimulate the economy.”
The Nikkei 225 in Tokyo fell 3.2% to 26,152.12 and in Hong Kong the Hang Seng fell 2.6% to 23,664.80.
The Kospi in Seoul fell by 2.9% to 2,630.78, despite a surprise market start for battery maker LG Energy Solutions, whose shares began trading at nearly twice their offer price after the initial public offering, which saw bids rise to $ Attracted the equivalent of 13 trillion.
Shares of LG Energy Solutions fell initially, but then recovered, gaining 3.3%. Expectations of huge growth in the market for electric vehicles garnered huge interest from the company. Its market capitalization of 105.3 trillion won ($87.62 billion) is second only to Samsung Electronics Co in South Korea.
Samsung shares fell 2.1% on Thursday after reporting its operating profit For the last quarter, there was an increase of more than 53% compared to the same period last year as it thrived during the pandemic, relying on its dual strength in parts and finished products.
The Shanghai Composite Index fell 0.9% to 3,425.28 and Sydney’s S&P-ASX 200 fell 2% to 6,822.10.
India’s Sensex fell by 1.8% to open at 56,809.30. New Zealand and Southeast Asian markets also declined.
On Wall Street, the S&P 500 slipped to 4,349.93 after being up 2.2% ahead of the Fed announcement.
The Dow Jones Industrial Average fell 0.4% to 34,168.09. The Nasdaq Composite was little changed at 13,542.12, having gained 3.4% earlier in the day.
Wall Street rose soon after the Fed’s statement, but major indices gave up their gains as Chair Jerome Powell questioned how and when the central bank would allow its balance sheet to shrink after buying trillions of dollars worth of bonds through the pandemic. This will put pressure on the market interest rates.
Sales picked up as Powell acknowledged high inflation that has squeezed businesses and consumers are not getting better. This could force the Fed to be even more aggressive about raising rates and removing its support for the markets.
The last time the Fed raised rates and at the same time shrank its balance sheet was at the end of 2018. The S&P 500 lost about 20%.
“Since the December meeting, I would say that the inflation situation is roughly the same, but maybe a little worse,” Powell said. “It hasn’t gotten better. It’s probably gotten a little worse, and that’s been the pattern.”
Powell also said There is room to raise interest rates without hurting the labor market, and won’t rule out the possibility that the Fed could raise short-term rates in one of its seven remaining meetings this year or opt to raise them higher than usual. any of the
The Fed’s near-zero interest rates helped prop up stock prices for nearly two years, but in mid-December, Powell and other officials said the market was fluctuating, easing economic growth to fight rising inflation. The plan to reduce incentives can be accelerated.
In energy markets, benchmark US crude fell 73 cents to $86.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.75 to $87.35 on Wednesday. Brent crude, the international oil price base, fell 72 cents to $88.02 a barrel in London. It rose by $1.76 to $89.96 in the previous session.
The dollar rose to 114.67 yen from Wednesday’s 114.55 yen. The euro declined from $1.1254 to $1.1223.