BEIJING (AP) — Asian stocks followed Wall Street’s decline on Friday as fears spread that hikes in U.S. interest rates to fight inflation could dampen economic growth.
Shanghai, Hong Kong, Seoul and Sydney fell. Tokyo rose slightly as trading resumed after a public holiday.
Wall Street’s benchmark S&P 500 plunged 3.6% on Thursday for its biggest one-day loss in two years as the optimism that had fueled the rally the day before evaporated.
Investors are worried about whether the Federal Reserve, which raised its key rate by half a percentage point on Wednesday, can calm inflation without tipping the slowing US economy into recession. Traders were temporarily encouraged by Chairman Jerome Powell’s comment that the Fed was not considering even bigger increases.
“Clearly, investors had their doubts about the Fed’s so-called ‘dovish’ hike,” ING’s Rob Carnell said in a report. The likelihood is that “rate hikes are coming quickly, but little or no prospect of a reversal in inflation any time soon.”
The Shanghai Composite Index fell 1.6% to 3,019.11 and Hong Kong’s Hang Seng plunged 3.6% to 20,051.61. The Nikkei 225 in Tokyo added 0.9% to 27,053.81.
Seoul’s Kospi fell 1.3% to 2,642.26 and Sydney’s S&P-ASX 200 fell 2.3% to 7,197.40. New Zealand and Singapore also fell.
Russia’s war on Ukraine, high oil prices and global supply chain disruptions add to investor unease.
Also Thursday, the Bank of England raised its key rate to its highest level in 13 years, its fourth hike since December to calm British inflation which is at 30-year highs.
The S&P 500 fell 3.6% to 4,146.87, restoring Wednesday’s 3% gain.
The Dow Jones Industrial Average fell 3.1% to 32,997.97. The Nasdaq, dominated by technology stocks, fell 5% to 12,317.69.
The US government was due to release employment numbers on Thursday, a closely watched data point.
BNP Paribas economists still expect the Fed to continue raising the fed funds rate until it hits a range of 3% to 3.25%, from zero to 0.25% earlier This year.
Energy markets remain volatile as the conflict in Ukraine continues and demand remains high amid oil shortages. European governments are trying to replace energy supplies from Russia and are considering an embargo. OPEC and allied oil producing countries decided on Thursday to gradually increase the flow of crude they send around the world.
Benchmark U.S. crude gained 77 cents to $109.03 in electronic trading on the New York Mercantile Exchange. The contract rose 45 cents to $108.26 on Thursday. Brent crude, the price basis for international oil trade, advanced 75 cents to $111.65 a barrel in London.
The dollar rose to 130.47 yen from 130.40 yen on Thursday. The euro gained $1.0539 from $1.0519.
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