Asian shares decline, echoing broad slump on Wall Street
TOKYO — Asian shares retreated on Wednesday, echoing a broad decline on Wall Street and driven by worries about how the war in Ukraine may push prices for oil and other commodities higher. Tokyo’s benchmark rose following the announcement by Fumio Kirishia, Prime Minister of Japan, of measures to assist poor families and small businesses in dealing with rising prices and weakening currencies.
Japan’s benchmark Nikkei 225 dropped 1.9% in morning trading to 26,200.26.
Elsewhere in the region, South Korea’s Kospi slipped 1.1% to 2,638.93. Australia’s S&P/ASX 200 shed 0.7% to 7,267.30. Hong Kong’s Hang Seng lost 0.9% to 19,762. 57 and the Shanghai Composite index fell 0.6% to 2,869.05. Investor sentiment is being affected by concerns about restrictions on movement and business activity in Beijing and Shanghai to combat an increase in coronavirus cases. The ramifications from the war in Ukraine are weighing on investor sentiment. Besides the risks of a wider conflict, they have pushed already high prices for many commodities and goods higher, complicating the economy and creating hardships for many consumers and businesses.
” After taking a backseat to earnings season, renewed tensions between Ukraine and Russia serves as a reminder of geopolitical risks that are still present,” Yeap Jun Rong from IG in Singapore, a market strategist.
On Tuesday, U.S. benchmarks were weighed down by sharp declines in Big Tech stocks that took the Nasdaq to its worst drop since September 2020. The S&P 500 fell 2.8% to 4,175.20. The benchmark index closed the day with 95% of its stocks losing ground. The Dow Jones Industrial Average shed 2.4% to 33,240.18. The day’s losses were most severe for the tech-heavy Nasdaq. It tumbled 4%, to 12,490. 74, its worst drop since Sept. 8, 2020. The index is now down 20% this year as investors shun the ultra-pricey tech sector, which made gangbuster gains for much of the pandemic. With the Federal Reserve poised to aggressively increase interest rates in its fight against inflation, traders have become less willing to pay the high prices they paid for Microsoft, Facebook’s parent, and other tech giants.
Microsoft fell 3.7%. Alphabet, Google’s parent company, saw its shares fall 3.6% in regular trading, and then lost 6% in after-hours trades after it reported results that were below analysts’ expectations.
A number of large technology companies will be reporting earnings this week. This includes Meta, the parent company of Facebook, and Apple on Thursday.
Tesla slumped 12.2% over concerns that CEO Elon Musk will be distracted and less engaged in running the electric vehicle maker as he buys social media company Twitter, which fell 3.9%.
Retailers and other companies that rely on direct consumer spending also fell broadly. General Motors lost 4.5%, while Nike lost 5.8%.
General Electric fell 10.3% for one of the sharpest losses in the market after telling investors that inflation and other pressures are weighing on its profit forecast for the year.
Bond yields fell. The yield on the 10-year Treasury fell to 2. 73% from 2. 82% late Monday.
Energy companies eked out a gain, the only one of the 11 sectors in the S&P 500 to do so.
In energy trading, benchmark U.S. crude added 77 cents to $102. 47 a barrel. The benchmark U.S. crude oil price rose 3.2% Tuesday. Brent crude, the international standard, gained 83 cents to $105. 82 a barrel. After rallying in the second half March, U.S. stocks were on unstable ground in April. The S&P 500 has fallen for three straight weeks. It’s the market becoming a little more comfortable, with a slowdown at its best and recessionary worries at its worst,” said Ross Mayfield of Baird, an investment strategy analyst.
Earnings for industrial and retail companies are a key focus for the rest of the week. Boeing, the plane maker, reports its results on Wednesday. Caterpillar, along with McDonald’s (and Amazon) will announce its earnings on Thursday.
In economics news, Conference Board reported that although consumer confidence declined slightly in April, it remains high. The Commerce Department will release its March personal income and expenditure report on Friday.
Economists and investors are concerned that the U.S. economy might slow sharply or even fall into a recession because of the big interest-rate increases the Fed is expected to push through.
In currency trading, the U.S. dollar edged up to 127. 46 Japanese yen from 127. 23 yen The euro cost $1. 0650, up from $1.0639.
AP Business Writer Damian J. Troise contributed.
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