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Asian markets tumble on US inflation data

(RTTNews) – Asian stock markets are trading mostly lower on Monday following broadly negative signals from Wall Street on Friday as data showing a bigger-than-expected rise in US inflation in May raised concerns regarding growth and the outlook for interest rates triggering a sell-off in the markets. The imposition of new lockdowns in several parts of Shanghai also weighed on sentiment. Asian markets closed mostly lower on Friday.

The spike in inflation is likely to convince the Federal Reserve to follow through on its plans to aggressively hike interest rates in an effort to fight inflation. The Fed will announce its latest monetary policy decision on Wednesday, with the central bank expecting the central bank to raise interest rates another 50 basis points.

Michael Pearce, senior US economist at Capital Economics, said the inflation data raised the possibility that the Fed could raise rates by 75 basis points next week.

A separate report from the University of Michigan showed that consumer sentiment in the United States fell to its lowest level on record in June.

Meanwhile, China said it would reimpose Covid-19 lockdowns in eight of Shanghai’s 16 districts after the country’s biggest economic hub recorded a cluster outbreak of COVID-19. Parts of Beijing have also reimposed some restrictions due to an increase in coronavirus cases.

The Australian Stock Exchange is closed on Monday due to the Queen’s birthday. Australian shares closed sharply lower on Friday.

In the currency market, the Australian dollar is trading at $0.702 on Monday. Japan’s stock market is down sharply on Monday, giving up gains from the previous session, with the Nikkei 225 plunging 700 points to fall below the 27,100 level, following broadly negative signals from Wall Street on Friday, with tech stocks and stocks rising. Other clues saw heavyweights fall as data showing a bigger-than-expected rise in US inflation in May raised concerns about growth and the outlook for interest rates. The benchmark Nikkei 225 closed the morning session at 27,088.86, down 735.43 or 2.64%, after hitting a low of 27,008.49 earlier. Japanese stocks ended sharply lower on Friday.

Market heavyweight SoftBank Group lost nearly 5% and operator Uniqlo Fast Retailing lost nearly 2%. Among automakers, Honda and Toyota lost more than 3% each.

In technology, Advantest lost more than 4%, while Tokyo Electron and Screen Holdings fell nearly 4% each. In the banking sector, Sumitomo Mitsui Financial is down more than 1%, Mizuho Financial is down almost 1% and Mitsubishi UFJ Financial is down almost 2%.

Major exporters are down, with Panasonic losing more than 3%, Mitsubishi Electric down more than 2%, Sony down almost 4% and Canon down more than 1%. Among the other big losers, Omron and Kubota are down almost 6% each, while M3 and Denso are down more than 5% each. CyberAgent, Recruit Holdings, Yamaha, Daikin Industries and Ebara are down nearly 5% each, while Nippon Sheet Glass, Fujitsu, TDK and Shin-Etsu Chemical are down more than 4% each.

Conversely, Kansai Electric Power gained more than 3%.

In the currency market, the US dollar is trading in the upper range of 134 yen on Monday.

Elsewhere in Asia, New Zealand, Hong Kong, South Korea and Taiwan are down 2.3-2.8% each. Malaysia and Indonesia are down 1.5% and 1.9%, respectively. China and Singapore are down 0.8 and 0.7%, respectively.

On Wall Street, stocks fell sharply during Friday’s session as traders reacted negatively to a much-anticipated report on consumer price inflation. The day’s sharp decline extended the selling seen during Thursday’s session.

The major averages ended the day just past their session lows. The Dow Jones fell 880.00 points or 2.7% to 31,392.79, the Nasdaq plunged 414.20 points or 3.5% to 11,340.02 and the S&P 500 fell 116.96 points or 2.9% at 3,900.86.

Major European markets also showed significant downward moves on the day. While Germany’s DAX index plunged 3.1%, France’s CAC 40 index plunged 2.7% and Britain’s FTSE 100 index fell 2.1%.

Crude oil prices fell on Friday as the dollar surged after data showing a sharp acceleration in US inflation raised fears of more aggressive rate hikes by the Federal Reserve. West Texas Intermediate crude oil futures for July ended down $0.84 or 0.7% at $120.67 a barrel.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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