BEIJING/HONG KONG (Reuters) – Asian stocks went down on Thursday, following a big drop on Wall Street. Investors were worried about global inflation, China’s zero-COVID policy, and the war in Ukraine, while the dollar, which is seen as a safe haven, went down.
Even the European stock markets looked like they were going to have a rough day. The futures for the Euro Stoxx 50 fell 0.52 percent, the futures for the German DAX fell 0.63 percent, and the futures for the FTSE fell 0.51 percent.
Nasdaq futures went down by 0.15 percent, but S&P500 futures made up for earlier losses and went up by 0.05 percent.
Overnight on Wall Street, retail giant Target Corp (NYSE:TGT) said its quarterly profit had dropped in half and that rising costs would hurt its margins even more. Its stock price went down by 24.88 percent.The Nasdaq dropped almost 5%, while the S&P 500 fell by 4%. [.N]
“The bounce on Tuesday turned out to be ‘too optimistic,'” said Hebe Chen, a market analyst at IG. “The self-doubt caused by the mistake only makes traders click the sell button even harder.”
MSCI’s broadest index of Asia-Pacific shares outside of Japan ended a four-day streak of gains by falling 1.8 percent. Australia’s resource-heavy index fell 1.5 percent, Hong Kong stocks fell 2.1 percent, and bluechips in mainland China fell 0.3 percent, all of which hurt the index.
The Nikkei in Japan fell by 1.7%.
The index fell more than 3%, and tech giants listed in Hong Kong were hit especially hard. Tencent fell more than 6% after it said it didn’t make any more money in the first quarter. This was its worst quarter since it went public in 2004.
China’s tech industry is still reeling from a year-long government crackdown and slowing economic prospects caused by Beijing’s strict zero-COVID policy, even though Vice Premier Liu He’s comments to tech executives on Wednesday were calming.
Two U.S. central bankers say they think the Federal Reserve will slow down its policy tightening after July. This is because the Fed wants to stop inflation without sending the economy into a recession by raising borrowing costs too much.
“Since we entered the year 2022, worries about inflation have never gone away. But things don’t seem to be headed in the direction of “out of control” even though they haven’t reached the point where they can’t be fixed. That is probably the part that worries the market the most, “Chen from IG said.
The U.S. dollar went down 0.15 percent against a group of major currencies after gaining 0.55 percent overnight, which ended a three-day losing streak. The dollar had gone up because people were less willing to take risks.
The Australian dollar went up by 0.8%, and the New Zealand dollar went up by 0.6%. This was because Shanghai’s COVID lockdown was eased, which made people feel better. [FRX/]
British inflation rose to its highest annual rate since 1982, according to data released on Wednesday. Canadian inflation rose to 6.8% last month, mostly because the cost of food and housing went up.
Bilal Hafeez, the CEO of the London-based research firm MacroHive, said that there was a strong bias toward safe assets, especially cash, right now.
Hafeez told the Reuters Global Markets Forum, “There may be short-term jumps in stocks like the last few days, but the big picture is that the era of low yields is over and we are moving into an environment with higher rates.”
“This will put pressure on all markets that did well when yields were low, especially stocks.”
Overnight, U.S. Treasuries went up, and they mostly stayed the same in Asia. This means that the yield on benchmark 10-year Treasury notes is now 2.9076 percent.
The two-year yield hit 2.680 percent, which was higher than the U.S. closing rate of 2.667 percent.This is because traders expect the Fed Funds rate to go up.
Oil prices went down at first, but then they went back up as worries about tight global supplies outweighed worries about slower economic growth.
Brent crude went up 1.2% to $110.41 per barrel, and U.S. crude went up 0.8% to $110.48 per barrel.
Gold went down a little bit. The spot price of gold was $1814.88 per ounce. [GOL/]
