SRabbit Asian stocks have recovered from their worst losses after they started trading at near highs in Europe yesterday and Wall Street fell into the so-called bear market.
London and Frankfurt rose open, but retreated a little later in the morning. Shanghai has moved forward and Hong Kong has leveled off. Tokyo and Paris declined.
On Monday, the Benchmark S & P 500 lost 3.9%, 21.8% below its peak. At the heart of the sale is the Federal Reserve’s efforts to curb inflation by raising interest rates. The Fed is scrambling to control prices, the main way being to raise interest rates, which is a dull tool that can significantly slow the economy and cause a recession.
The withdrawal on Wall Street initially surprised investors around the world. Australia’s S & P / ASX 200 fell 3.6% after reopening on Tuesday from Monday’s holiday.
However, the global market is not always in step with Newyork, and in a sharp decline, some risk-sensitive investors are looking for bargains.
Some economists speculate that if the Fed meets on Wednesday, it could raise its key rate by three-quarters percentage points. This is three times normal and the Fed hasn’t done it since 1994.
“Another day to digest recent US inflation data, and another day near the FOMC conference in June and the global market, we and people here in Asia don’t like where the global economy is now. “It shows,” said Robert Kernel, Head of Asia Pacific Research at ING, in a report.
Japan’s Nikkei 225 fell 1.3% to 26,629.86. South Korea’s Kospi fell 0.5% to 2,492.97. Hong Kong’s Hang Seng Index remained almost unchanged at 21,067.99, less than one point. Shanghai Composite rose 1.0% to 3,288.91.
Apart from the turmoil over inflation and what central banks are doing to curb soaring prices, restrictions on curbing the spread of COVID-19 in China also weigh heavily on Asian market sentiment.
The shift to higher interest rates by central banks, especially the federal government, has reversed the remarkable rise in stock prices caused by the massive support for the market after the pandemic blow in early 2020.
The market is preparing for a higher-than-usual rise, in addition to some disappointing signs of economic and corporate profits, including record lows for consumer sentiment suffering from soaring gasoline prices.
Investors are rethinking what they are willing to pay for a wide range of stocks, from high-flying tech companies to industrial conglomerates. In parallel with the S & P 500, the Dow Jones Industrial Average fell 2.8% and the tech-heavy Nasdaq Composite index fell 4.7%.
One of the more reliable warning signals for a recession is ringing. This includes the Treasury, an IOU provided by the US government to investors who lend money. The Yield Curve, a chart showing how much interest various government bonds are paying, looks for clues about how the bond market feels about the long-term outlook for the US economy.
Yesterday, the closely followed part of the yield curve was temporarily relit for the second time this year. 2-year government bonds traded at 3.39% and 10-year bonds yielded 3.36%.
Long-term government bonds usually offer higher yields than short-term government bonds and are charts with an upward slope. This is because investors usually demand higher yields to keep money out for longer.
If the yield on short-term government bonds is higher than the yield on long-term government bonds, market watchers call it the “reverse yield curve.” Investors are nervous if the chart has a downward slope.
Another factor affecting inflation and investor sentiment is the price of oil. It stayed close to $ 120 a barrel yesterday and has increased by about 60% so far this year. Yuri Kageyama, Tokyo, MDT / AP