BEIJING (AP) – Asian stock markets fell again Monday as investors struggled with fears that the Federal Reserve and European central banks may be poised to trigger a recession to suppress inflation.
Shanghai, Tokyo, Hong Kong and Sydney recorded declines. Oil prices rose almost $1 a barrel, but the US crude benchmark remained below $80.
Wall Street fell on Friday after the Fed raised its forecast for how long interest rates would need to stay high to curb inflation, which is near four-decade highs. The European Central Bank has warned that new interest rate hikes are expected.
That “hawkish rhetoric” shows “increasing risks of a global recession in the pipeline,” Mizuho Bank’s Tan Boon Heng said in a report.
The Shanghai Composite index lost 1.3% to 3,127.78, even as China’s ruling Communist Party said on Friday it would try to reverse an economic slowdown by boosting domestic consumption and the real estate market.
In Tokyo, the Nikkei 225 fell 1.1% to 27,218.28 and Hong Kong’s Hang Seng fell 0.7% to 19,316.58.
In Seoul, the Kospi retreated 0.4% to 2,350.27 and Sydney’s S&P-ASX 200 fell 0.2% to 7,137.00. Singapore advanced, while New Zealand and other Southeast Asian markets declined.
Wall Street’s benchmark S&P 500 index posted its second weekly decline after losing 1.1% to 3,852.36 on Friday, its third daily decline. It’s down about 19% this year.
The Dow Jones Industrial Average was down 0.8% at 32,920.46. The Nasdaq composite lost 1% to 10,705.41.
More than 80% of S&P 500 stocks fell. Technology and healthcare stocks were among the biggest weights in the market. Microsoft fell by 1.7% and Pfizer by 4.1%.
US inflation eased to 7.1% year-on-year in November from a high of 9.1% in June, but remains painfully high.
The Fed raised its benchmark short-term lending rate by one and a half percentage points on Wednesday, the seventh increase this year. That dashed hopes that the US central bank could ease inflation amid signs of cooling inflation and economic activity.
The federal funds rate is at a 15-year high of 4.25% to 4.5%. The Fed’s forecast to reach a range of 5% to 5.25% by the end of 2023. His forecast does not call for a rate cut until 2024.
In energy markets, the cost of American crude oil rose by 94 cents to $75.23 per barrel on the New York Mercantile Exchange. The contract traded down $1.82 on Friday, hitting $74.29. Brent oil, the basis for international oil trading in London, increased by $1.01 to $80.05 per barrel. It lost $2.17 to $79.04 in the previous session.
The dollar fell to 136.25 yen from 136.56 yen on Friday. The euro rose from $1.0600 to $1.0609.
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