Asian stocks fall ahead of US inflation
Data on Wednesday is expected to show that headline inflation in the United States in July fell from the previous month’s four-decade high of 9.1%. But a FactSet survey found traders expect core inflation, which is wiping out volatile food and energy, leaving rents and other costs, to rise slightly. This is despite other data showing a cooling in economic activity.
Anything above 8% is “still too high” for the Fed, Mizuho Bank’s Tan Boon Heng said in a report.
“The fight against inflation is far from over,” Tan said.
The Shanghai Composite Index lost 0.6% to 3,227.98 and the Nikkei 225 in Tokyo fell 0.7% to 27,803.26. The Hang Seng in Hong Kong plunged 2.2% to 19,559.33.
The Kospi in Seoul fell 0.9% to 2,480.20 and Sydney’s S&P-ASX 200 fell 0.3% to 7,005.70.
India Sensex opened less than 0.1% lower at 58,827.86. Markets in New Zealand and Southeast Asia declined.
Investors fear efforts by the Fed and other central banks in Europe and Asia to rein in inflation, which has been at multi-decade highs, could derail global economic growth.
On Wall Street, the S&P 500 fell to 4,122.47 as traders waited for more evidence of how aggressively the Fed might pursue further rate hikes.
The Fed has raised rates four times this year, including twice by 0.75 percentage points, triple its usual margin. Investors expect another 0.75 percentage point rise in September after last week’s data showed hiring was stronger than expected.
Fed officials acknowledge there is a danger that the US economy could tip into recession, but some cite the strength of the labor market as evidence that it can tolerate more rate hikes.
The Dow Jones slid 0.2% to close at 32,774.41. The Nasdaq fell 1.2% to 12,493.93. The Russell 2000 ended down 1.5%, at 1,912.89.
Chipmaker Micron Technology fell 3.7% after warning investors that revenue could come in lower than expected due to weaker demand. This warning hit other chipmakers hard, with Nvidia losing 4%.
Norwegian Cruise Line plunged 10.6% for the biggest drop in the S&P 500 after reporting disappointing results and weak revenue forecasts. Expedia fell 1.6% and American Airlines 2.7%.
Markets were also rocked by Russia’s war on Ukraine, which has caused prices for oil, wheat and other commodities to soar, and uncertainty over China’s anti-virus measures that have disrupted manufacturing and trade.
In energy markets, benchmark U.S. crude fell 65 cents to $89.85 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 26 cents to $90.50 on Tuesday. Brent crude, the price basis for international trade, fell 54 cents to $95.77 a barrel in London. It was down 34 cents the previous session at $96.31.
The dollar fell to 134.96 yen from 135.18 yen on Tuesday. The euro fell from $1.0205 to $1.0217.