By YURI KAGEYAMA
TOKYO (AP) – Asian shares fell in cautious trading Wednesday after Wall Street stocks sank to new year lows.
Tokyo, Shanghai, Seoul and Sydney are lower while Hong Kong is higher.
Technology stocks led Tuesday’s losses on Wall Street. The growing number of coronavirus infections in Asia, linked to the spread of omicrons, are of alarm among policymakers. Asian economies have suffered as a result of the pandemic and are struggling to bounce back.
Yeap Jun Rong, market strategist at IG, said: “The risk-on mood in global markets is shifting into the Asian session today, as market expectations continue to price in for Fed tightening. stronger tightening is coming, with concerns that economic momentum may be limited,” said Yeap Jun Rong, market strategist at IG in Singapore.
Japan’s benchmark Nikkei 225 fell 1.8% to 27,751.58. Australia’s S&P/ASX 200 fell 0.4% to 7,381.30. The South Korean Kospi was little changed, inching less than 0.1% to 2,864.01. Hong Kong’s Hang Seng rose 0.5% to 24,226.08, while the Shanghai Composite added 0.1% to 3,574.37.
On Wall Street, losses in major indexes have increased this month as rising inflation and the latest outbreak of the pandemic keep investors cautious.
Rising expectations of a Federal Reserve rate hike have boosted Treasury yields. The 10-year Treasury hit 1.87% Tuesday, its highest since January 2020. It was at 1.77% late Friday.
Investors are currently pricing above the 86% probability that the Fed will raise short-term rates at the policymakers’ meeting in March. A month ago, they saw less than a 47 percent chance of that, according to CME Group.
The S&P 500 fell 1.8% to 4,577.11, with about 90% of stocks in the benchmark index closing in the red.
Nasdaq, which is heavily weighted in technology stocks, fell 2.6% to 14,506.90. The Dow Jones Industrial Average fell 1.5% to 35,368.47. Shares of small companies, a gauge of confidence in economic growth, also lost ground. The Russell 2000 index fell 3.1%, to 2,096.23.
Nasdaq has taken the brunt of the loss this month, down 7.3%. That puts the index within 2.7% of a correction, Wall Street says when a stock or index is down 10% or more from its last peak. The S&P 500 index is down nearly 4% for the month after setting an all-time high on the first trading day of the year.
“The 10-year yields continue to move higher, leading to more and more aggressive pricing in the Federal Reserve,” said Ross Mayfield, investment strategy analyst at Baird. “Up until the end of the week, I didn’t see any speculation about two rate hikes at the March meeting, and now you start to hear that talk.”
The Fed is under pressure to reduce inflation, which spiked last month at its fastest pace in nearly 40 years. At the same time, the job market has rebounded, leaving last month’s unemployment rate at a pandemic low of 3.9%. That gives the central bank more time to rein in the unprecedented support it has been providing to the economy since the pandemic hit.
Higher rates could help curb inflation but would also mark an end to conditions that have put the market in “easy mode” for many investors since early 2020.
Higher ratios also make shares of high-tech companies and other expensive growth stocks less attractive. The sector was the biggest drag on the S&P on Tuesday. Apple fell 1.9% and chipmaker Nvidia fell 3.9%.
Banks also weighed on the market after Goldman Sachs said its fourth-quarter profit fell 13% from a year earlier, largely due to the huge pay packages Goldman is paying employees. Goldman’s results echo those of JPMorgan and Wells Fargo last week, and mark lower profits and higher costs as payroll costs rise.
Goldman shares fell 7%, while JPMorgan fell 4.2%. Wells Fargo fell 2.4%.
Investors returned after US markets closed on Monday for the Martin Luther King Jr Day holiday. also reviewed the latest trading and earnings news of the company. Activision Blizzard jumped 25.9% on news of a blockbuster deal. Microsoft, down 2.4%, is buying the maker of games like “Call of Duty” and “Candy Crush” for $68.7 billion.
Bank of America, UnitedHealth and United Airlines report results on Wednesday. American Airlines, Union Pacific and Netflix earnings are due on Thursday.
In energy trading, the price of benchmark US crude added $1.10 to $85.93 per barrel in electronic trading on the New York Mercantile Exchange. U.S. crude oil prices rose 1.9 percent at $84.83 a barrel, a seven-year high, on Tuesday. Brent crude, the international standard, rose $1.03 to $88.54 a barrel.
In currency trading, the US dollar fell from 114.61 yen to 114.58 Japanese yen. The euro was unchanged at $1.1327.
AP Business Writers Damian J. Troise and Alex Veiga contributed.
https://www.ocregister.com/2022/01/18/asian-shares-mostly-lower-after-retreat-on-wall-street/ Asian shares mostly fall after Wall Street pullback – Orange County Register