Asian stock markets drop on fears of inflation and oil prices

Asian stock markets drop on fears of inflation and oil prices

Asian stocks fell on Wednesday as inflation concerns raised expectations that the US Federal Reserve may raise interest rates.

Japan’s Nikkei 225 fell 1.1% to 2,9436.73 in early trade, after a national holiday on Tuesday. South Korea’s Kospi index fell 0.3 percent to 2,988.40. Australia’s S&P/ASX 200 Index is down nearly 0.1% at 7,403.30. Hong Kong’s Hang Seng fell 0.3% to 24,588.48, while the Shanghai Composite fell 0.4% to 3,575.93.

“Markets continue to shift their expectations towards a tighter monetary policy by the Federal Reserve,” said Yeap Jun Rong, market analyst at IG, adding that investors will be watching US data that will be released later in the day.

Some Asian central banks have already started raising interest rates to curb inflation. New Zealand raised its benchmark interest rate by 0.25% Wednesday to 0.75%.

In October, the Reserve Bank raised it from a record low of 0.25% to 0.5%, the first such rally in more than seven years, removing some of the support it had put in place when the coronavirus pandemic began.

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The Fed will release minutes later in the day from its October policy meeting, which could give investors more details about the central bank’s plan to start tapering off bond purchases that helped keep interest rates low.

Investors have been watching to see if pressure from rising inflation will prompt the Fed to speed up its plans to scale back bond purchases and raise its benchmark interest rate.

Wall Street ended a choppy day of trading, as gains in banks and energy companies offset losses elsewhere in the market. The S&P 500 managed to rise 0.2% to 4,690.70 after fluctuating between small gains and losses for much of the day.

The Dow Jones Industrial Average rose 0.5% to 35813.80, while the Nasdaq Composite closed 0.5% lower at 15,775.14. Small-cap stocks also fell. The Russell 2000 Index fell 0.1% to 2,327.86.

More than 60% of stocks rose in the S&P 500. Gains in banks, energy stocks, and home goods companies were dragged down by losses in technology and telecoms stocks and a mix of companies that rely on consumer spending.

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Retailers were mixed before the official start of the holiday shopping season. Retailer Dollar Tree jumped 9.2% with the biggest gain in the S&P 500. Starbucks stock rose 1.9%. Best Buy slumped 12.3%, the biggest drop in the S&P 500, as concerns about shrinking profit margins outpaced strong earnings.

Technology and telecoms companies have also affected the broader market. Adobe shares fell 1.3% and Intel 1.5%.

Zoom Video sank 14.7% on the day after the video conferencing company reported that third-quarter revenue growth slowed.

The yield on the US 10-year Treasury rose to 1.68% from 1.63% late Monday, but fell to 1.65% by midday Wednesday in Asia.

The price of US crude oil rose 2.3% and wholesale gasoline rose 3.4% on Tuesday after President Joe Biden ordered the release of 50 million barrels of oil from the country’s strategic reserve to help lower energy costs. This step was taken in coordination with other large oil-consuming countries, including Japan.

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Although the overall Japanese data did not show an inflation problem on the scale of other countries, critics say it is not blatantly clear, in sectors criticized by high energy prices, from companies that rely on fuel to plastic bags that are a petroleum product.

The release of oil reserves may not necessarily lead to lower oil prices, but analysts say it may serve as a message to OPEC.

In energy trading, US crude rose 5 cents to $78.55 a barrel. Brent crude, the international benchmark, fell 21 cents to $81.12 a barrel.

Stocks are likely to see more mixed trading this week, with US markets closed Thursday for Thanksgiving and then closing early Friday.

Wall Street will get a few pieces of economic data on Wednesday that could give investors a better idea of ​​the pace and breadth of the economic recovery. The Labor Department will release its weekly report on unemployment benefits. The Commerce Department released data on third-quarter GDP and new home sales for October.

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In currency trading, the US dollar fell to 115.09 Japanese yen from 115.15 yen. The euro was trading at $1.1236, down from $1.1249.

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Author Nick Berry contributed to the Associated Press from Wellington, New Zealand.

Copyright 2021 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.

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