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Asian shares fall amid interest rates, earnings worries

TOKYO –

Asian shares fell on Monday after US stocks ended last week with losses as global market expectations of higher interest rates continued to set.

Japan’s benchmark Nikkei 225 lost 1.9% in morning trade to 26,583.70. South Korea’s Kospi fell 1.6% to 2,661.94. Hong Kong’s Hang Seng fell 2.8% to 20,064.32, while the Shanghai Composite dropped 2.4% to 3,012.93. Trading was closed in Australia on Anzac Day, a national holiday.

The news that Emmanuel Macron had won the French presidential election over the weekend, ending a second term as widely expected, reassured the market that France would not abruptly turn its course amid the war in Ukraine.

A key show by candidate Marine Le Pen, a populist and nationalist, is a reminder of how fragile that situation can be, analysts say. Le Pen pledged to dilute France’s relations with the EU, NATO and Germany, and spoke out against EU sanctions on Russian energy supplies.

Rising COVID-19 cases in China are fueling worries that more pandemic shutdowns could undermine the economic recovery in the region. Other countries are also facing economic problems related to COVID-19, such as the lack of revenue from tourism in Japan, where cases continue to rise and fall while the country gradually slows down. Borders are open, but only for business travelers.

Investors are also keeping an eye on earnings reports from companies, including big Japanese names, due out in the coming weeks. Several reports from US companies, which had already been released, were disappointing, contributing to the decline that ended last week on Wall Street.

What the US Federal Reserve can do is of interest to investors. The Federal Reserve Chair has indicated that the central bank could raise short-term interest rates to double their usual levels at upcoming meetings, starting in two weeks. The Fed raised key interest rates overnight once, the first hike since 2018.

The S&P 500 index fell 2.8 percent on Friday to 4,271.78, marking its third consecutive weekly loss. The Dow fell 2.8% to 33,811.40, its biggest drop in 18 months. Nasdaq lost 2.6% to close at 12,839.29. The Dow and Nasdaq also posted losses for the week.

Shares of smaller companies also fell sharply. The Russell 2000 fell 2.6% to 1,940.66.

“Following the massive sell-off on Wall Street that ended last week, the overall risk appetite in the region could also come under pressure,” said Yeap Jun Rong, chief market strategist at IG in Singapore.

Markets around the world are feeling similar pressures on exchange rates and inflation, especially in Europe as the war in Ukraine pushes up oil, gas and food prices.

In energy trading, the price of benchmark US crude oil lost $2.91 to $99.16 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell $2.93 to $103.72 a barrel.

In currency trading, the US dollar fell to 128.51 Japanese yen from 128.59 yen. The euro is priced at $1.0789, down from $1.0803.

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