Asian stocks plunge after Wall Street sell-off on inflation, COVID | Financial markets

Asian stocks fell on Thursday, following a sharp Wall Street sell-off, as investors worried about global inflation, China’s zero-COVID policy and the Ukraine war, while the safe-haven dollar eased.

European equity markets also looked poised for another tough day. Euro Stoxx 50 futures across the region fell 0.52 percent, German DAX FDXc1 futures fell 0.63 percent, while FTSE FFIc1 futures fell 0.51 percent.

Nasdaq futures fell 0.15 percent, although S&P500 ESc1 futures reversed earlier losses to rise 0.05 percent.

Overnight on Wall Street, retail giant Target Corp warned of a further hit to margins from rising costs as it reported that its quarterly profit had been cut in half. Its shares fell 24.88 percent. The Nasdaq fell almost 5 percent, while the S&P 500 lost 4 percent.

“Tuesday’s bounce was shown to have been ‘too bullish,’ so the doubt stemming from the error in judgment only makes traders click the sell button even harder,” said Hebe Chen, a market analyst at IG.

MSCI’s broader index of Asia-Pacific stocks outside of Japan snapped four days of gains and slumped 1.8 percent, dragged down by a 1.5 percent loss in Australia’s resource-heavy index, a 2.1 percent drop in Hong Kong stocks and a 0.3 percent decline in mainland China. blue chips.

Japan’s Nikkei lost 1.7 percent.

Hong Kong-listed tech giants were hit particularly hard, with the index falling more than 3 percent. Tencent sank more than 6 percent after reporting no revenue growth in the first quarter, its worst performance since going public in 2004.

China’s tech sector is still reeling from a year-long government crackdown and slowing economic outlook stemming from Beijing’s strict zero-COVID policy, despite Vice Premier Liu He’s reassuring comments to executives at technology had boosted confidence on Wednesday.

Two US central bankers say they expect the Fed to slow to a more measured pace of policy tightening after July as it seeks to stifle inflation without raising borrowing costs so high that they send the economy into a recession.

‘Concern about inflation’

“It must be said that concerns about inflation have never gone away since we entered 2022. However, while things have not reached the point of no return, they are apparently heading in the direction of ‘out of control’. That’s probably the most worrying part for the market,” IG’s Chen said.

The US dollar, which had risen on falling risk appetite, was down 0.15 percent against a basket of major currencies, after a 0.55 percent jump overnight that ended a losing streak. three days of losses.

The Australian dollar gained 0.8 percent as an easing in Shanghai’s COVID lockdown helped confidence.

Data on Wednesday showed British inflation rose to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8 percent last month, largely fueled by the rising food and housing prices.

Bilal Hafeez, chief executive of London-based research firm MacroHive, said there was a strong bias towards safe-haven assets, particularly cash, at the moment.

“There may be short-term bounces in equities like the last few days, but the big picture is that the era of low yields is over and we are transitioning to a higher rate environment,” Hafeez told the Global Markets Forum. from Reuters.
“This will put pressure on all markets that benefited from low yields, especially equities.”

US Treasuries rose overnight and were largely flat in Asia, leaving the benchmark 10-year Treasury note yield at 2.9076 percent.
The two-year yield, rising on traders’ expectations of higher Fed funds rates, hit 2.6800 percent compared with a US close of 2.667 percent.

Oil prices rebounded from early losses as lingering fears about tight global supplies outweighed fears about slower economic growth.

Brent crude rose 1.2 percent to $110.41 a barrel, while US crude CLc1 rose 0.8 percent to $110.48 a barrel.

Gold was slightly lower. Spot gold traded at $1814.88 per ounce.

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