Asian stocks mixed as investors await US profits, inflation
Shanghai and Hong Kong advanced while Tokyo and Seoul fell. Oil prices rose by more than $3 per barrel.
Wall Street’s benchmark S&P 500 index slid 1.7% on Monday as investors waited for a new round of corporate results to see how profits are affected by inflation that is at a four-decade high. Markets are concerned about the Federal Reserve’s and other central banks’ plans to lower inflation by lowering ultra-low interest rates. The anxiety has been heightened by Russia’s attack against Ukraine and China’s decision not to close down all businesses in Shanghai, its commercial capital to combat coronavirus outbreaks.
“Worries linger about the COVID-19 situation,” said Anderson Alves of ActivTrades in a report. “Markets are eyeing the situation in Ukraine for signs that could trigger further risk-off price action.”
The Shanghai Composite Index gained 1.5% to 3,213. 33 after authorities announced they would ease anti-coronavirus controls that shut down most businesses in China’s most populous city and disrupted manufacturing.
The Hang Seng in Hong Kong climbed 0.9% to 21,400. 40 while the Nikkei 225 in Tokyo shed 1.8% to 26,334.98.
The Kospi in Seoul gave up 1% to 2,666. 76 and Sydney’s S&P-ASX 200 retreated 0.4% to 7,454.00.
India’s Sensex opened down 0.8% at 58,476.81. New Zealand and Southeast Asian markets fell.
Later Tuesday was the due date for the Labor Department to report March consumer prices.
Investors worry inflation might be strong enough to encourage consumers to cut spending, which would likely mean a sharper slowdown in economic growth than expected.
On Monday, the S&P 500 fell to 4,412. 53 as all sectors in the index declined. The Dow Jones Industrial Average fell 1.2% to 34,308.08. The Nasdaq slid 2.2% to 13,411.96.
Microsoft fell 3.9% and Apple shed 2.6%.
Investors are anticipating a more aggressive shift from the Federal Reserve as it tries to rein in rising inflation. Already, the central bank has announced a quarter-percentage points increase in its key interest rate.
Fed officials indicated that they would consider raising the U.S. benchmark interest rate by twice the normal amount at upcoming meetings. They also indicated that they would reduce the Fed’s bond holdings, which would increase long-term borrowing rates.
Oil prices fell back after Chinese demand was weaker. This was due to the closure of most businesses in Shanghai and the imposition of controls on other industrial centers to prevent coronavirus outbreaks. Prices spiked above $130 per barrel last month on anxiety about possible disruption in Russian supplies.
Automakers and other manufacturers in China are reducing production after authorities tightened restrictions to help stem coronavirus outbreaks in Shanghai and other cities.
Benchmark U.S. crude gained $3. 07 to $97. 36 per barrel in electronic trading on the New York Mercantile Exchange. The contract was down $3. 97 on Monday to $94.29. Brent crude oil, which is the price base for international oil trading, was $3. 03 to $101. 51 per barrel in London. It was $4. 30 the previous session to $98.48.
The dollar rose to 125. 59 Japanese yen from Monday’s 125. 46 yen. The euro fell to $1. 0859 from $1.0890.
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