In line with a widespread sell-off on Wall Street, Asian shares are declining as the U.S. Federal Reserve is rumored to be planning another increase in interest rates.
Asian markets were trading lower Tuesday, mirroring a widespread sell-off on Wall Street on rumors of yet another interest rate increase from the United States. TOKYO (AP) Government Reserve.
Throughout morning trade, benchmarks fell in all of Asia, including Australia, China, South Korea, and Japan. Investors are unsure of when the highest inflation in decades will start to decline significantly, how much interest rates will need to rise to bring it under control, and how much the rate increases will slow the economy. This uncertainty is a contributing factor to the most recent market decline.
When the Federal Reserve holds its annual meeting in Jackson Hole, Wyoming, later this week, investors will be eager for information about these uncertainties.
According to Yeap Jun Rong, market strategist at IG in Singapore, "the depressed mood on Wall Street is playing out in the Asia session as well. Although another round of rate cuts to China's benchmark lending rate yesterday may help to cushion some losses, the overall upside could remain limited amid the shunning of risks."
Monday marked the second time in a week that the People's Bank of China slashed lending rates.
The benchmark Nikkei 225 index for Japan fell 1.3% to close at 28,413.04. S&P/ASX 200 Australia fell 0.5% to 7,009.30. The Kospi in South Korea decreased by almost 1.0% to 2,438.19. The Shanghai Composite dropped 0.3% to 3,267.19 and the Hang Seng in Hong Kong lost 0.7% to 19,520.36.
According to Anderson Alves at ActivTrades, "Investors are becoming cautious as ongoing risk-off flows have struck global markets." He added that rising gas costs were a significant danger, particularly for Europe.
The S&P 500 lost 2.1%, nearly double its losses from the previous week, when it snapped a four-week winning run and had its largest decline since mid-June. The Nasdaq fell 2.5%, while the Dow Jones Industrial Average dropped 1.9%.
Some of the industries that suffered the most losses on Monday were retail and technology. Stocks of smaller companies fell as well, pushing the Russell 2000 index down 2.1%.
Bond yields increased. The yield on the 10-year Treasury, which affects mortgage and other lending rates, increased to 3.03% late Friday from 2.97%.
Losses in the larger market follow a rise that lasted for several weeks. Investors are attempting to predict the direction of the economy as persistently high inflation harms both firms and consumers. Investors are concentrating on central banks' efforts to combat excessive prices without further impeding economic growth as a result of record-high inflation.
Tom Martin, senior portfolio manager at Globalt Investments, said: "You've got quite a rally and there's reason to not be sure where we're heading from here." "A recession still has a good chance of happening."
The Federal Reserve's July board meeting minutes, released last week, confirmed intentions for additional rate increases despite indications of a slowing economy. Traders are concerned that forceful measures to slow the economy could become excessive and trigger a recession.
At the Federal Reserve's annual conference in Jackson Hole, which begins on Thursday, Fed Chair Jerome Powell is expected to deliver a speech on Friday morning. Following a busy week of business and economic statistics that revealed inflation is still straining the economy but consumer spending is resilient, the Fed is holding its meeting.
Martin remarked, "I don't think we're out of the woods yet on inflation. "We still don't understand how inflation will play out or what the Fed will do."
Benchmark U.S. crude fell 54 cents to $90.23 a barrel in the energy market. The benchmark crude, Brent, increased by 77 cents to $97.25 a barrel.
The American dollar dropped in currency trading from 137.49 Japanese yen to 137.14 yen. The price of the euro at 99 cents barely moved.
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