Asian stocks slide in cautious trade, ignore US rally
TOKYO (AP) – Asian stocks slid in cautious trading on Wednesday, ignoring a rally on Wall Street led by tech companies and banks that wiped out most of the losses from the previous day’s sell-off.
Japan’s benchmark Nikkei 225 fell 1.3% in afternoon trading to 27,470.09. South Korea’s Kospi fell 1.4% to 2,919.87. The Australian S & P / ASX 200 lost 0.6% to 7,206.50. Hong Kong’s Hang Seng was little changed, falling less than 0.1% to 24,093.07. Trade has been closed in Shanghai for Chinese holidays.
Concerns remain in Asia over ongoing coronavirus infections, although hopes are growing that economic activity will be closer to normal later this year, rebounding from the deep downturn in 2020.
âOn the risk front, China’s credit problems and contagion risks have certainly not abated, with developer concerns still surfacing. As such, caution has not been thrown to the winds, âsaid Tan Boon Heng of the Asia and Oceania Treasury Department of Mizuho Bank in Singapore.
The risk of default by real estate developer China Evergrande Group of defaulting on its debt of more than $ 300 billion has alarmed investors already worried about the slowdown in Chinese growth.
Shares slipped in Japan after Prime Minister Fumio Kishida took office on Monday. Kishida said he might be in favor of a capital gains tax to improve public finances.
The outlook for the world’s third-largest economy remains uncertain. Fitch’s agency maintained a “negative outlook” for Japan, citing “downside risks to the macroeconomic and fiscal outlook from the coronavirus shock.”
Shares fell in New Zealand after its central bank raised interest rates for the first time in more than seven years, removing some of the support it put in place when the coronavirus pandemic began.
The Reserve Bank raised the benchmark rate from a record high of 0.25% to 0.5%. The move came despite a lockdown in Auckland due to a coronavirus outbreak.
The bank said inflation is expected to rise to 4% in the short term before falling to 2% in the medium term.
On Wall Street, the S&P 500 rose 1.1% to 4,345.72. The Dow Jones Industrial Average rose 0.9% to 34,314.67, and the Nasdaq gained 1.3% to 14,433.83. Small business stocks also posted gains. The Russell 2000 Index rose 0.5% to 2,228.36.
The gains marked a reversal in the overall market trajectory in recent weeks. The S&P 500 fell 4.8% in September, its first monthly decline since January. After steadily losing ground since reaching an all-time high on September 2, the index slipped below its 100-day moving average of 4,354 on Tuesday.
The market has been choppy for weeks, with inflation worries driving up and down swings for tech companies and the market at large.
Rising inflation is prompting companies from Nike to Sherwin-Williams to moderate their sales forecasts and warn investors that higher costs would hurt financial results. Supply chain disruptions and delays, as well as rising raw material costs, are among the main challenges businesses face as they try to continue to recover from the impact of the pandemic.
The persistent pandemic and problems in the global supply chain have prompted the International Monetary Fund to downgrade its forecast for global growth this year.
Yet Wall Street still expects solid corporate profit growth when the third quarter earnings season kicks off later this month. S&P 500 companies are expected to post a 27.7% increase in profits for the July-September quarter from a year earlier, according to FactSet.
Facebook rose 2.1% after falling nearly 5% on Monday after a former employee told “60 Minutes” that the company has always chosen its own interests over the public good. The former employee, Frances Haugen, testified Tuesday before Congress.
In energy trading, benchmark US crude added 8 cents to $ 79.01 a barrel in electronic trading on the New York Mercantile Exchange. It gained $ 1.31 to $ 78.93 a barrel on Tuesday.
Brent crude, the international standard, rose 9 cents to $ 82.65 a barrel.
In currency trading, the US dollar rose from 111.45 yen to 111.75 Japanese yen. The euro cost $ 1.1588, compared to $ 1.1601.