Indices tumbled in China, Japan, South Korea and Australia as investors weighed the prospect of a possible global recession.
Asian shares fell after mixed results on Wall Street as markets rattled at the prospect of a possible recession.
Tokyo’s Nikkei 225 index fell 2.2% to 25,984.51 on Wednesday, while the Kospi in Seoul lost 2.8% to 2,161.86. In Sydney, the S&P/ASX 200 fell 0.8% to 6,443.30.
Hong Kong’s Hang Seng fell 2.1% to 17,483.89 and the Shanghai Composite Index fell 0.8% to 3,068.59. Taiwan’s benchmark fell 2.1%.
The week started with a widespread sell-off that sent the Dow Jones Industrial Average into a bear market – or 20% below its January peak – joining other major US indexes.
On Tuesday, the S&P 500 fell 0.2 percent to 3,647.29, its sixth straight decline. The Dow fell 0.4% to 29,134.99, while the Nasdaq composite added 0.2% to close at 10,829.50.
Shares of small companies outperformed the broader market. The Russell 2000 added 0.4% to close at 1,662.51.
Major indexes remain in prolonged decline. With just a few days to go until the end of September, stocks are headed for another month of losses as markets fear that higher interest rates used to combat inflation could push the economy into recession.
The S&P 500 has fallen about 8% in September and has been in a bear market since June, when it fell more than 20% below its all-time high set on Jan. 4. of the Dow on Monday put it in the same company. is the benchmark index and Nasdaq is heavy on technology.
Interest rates increase
Central banks around the world have raised interest rates in an effort to make borrowing more expensive and cool off the hottest inflation in decades. The Federal Reserve has been particularly active and raised the benchmark interest rate, which hit many consumer and business loans, again last week. It is currently in the range of 3-3.25 percent. It was almost zero at the beginning of the year.
The Fed has also released a forecast suggesting its benchmark interest rate could be 4.4% by the end of the year, a full percentage point higher than expected in June.
Wall Street worries that the Fed will brake too hard on an already slowing economy and send it into recession. Higher interest rates are weighing on stocks, especially expensive tech companies, which tend to be less attractive to investors as interest rates rise.
Energy stockpiles rallied as US oil prices rose 2.3%. Exxon Mobil rose 2.1%.
Bond yields were mostly higher on Tuesday. Yields on two-year Treasuries, which tend to follow expectations for Federal Reserve action, fell to 4.31% from 4.34% late Monday. It is trading at its highest level since 2007. The yield on 10-year Treasuries, which affects mortgage rates, has risen to 3.98% from 3.93%.
Investors will be closely watching the company’s next round of earnings to gain insight into how companies are dealing with inflation. Companies will begin reporting their latest quarterly results in early October.
Consumer confidence remains strong, despite higher prices for everything from food to clothing. The latest consumer confidence report for September from The Conference Board showed confidence stronger than economists expected.
The government will release its weekly jobless claims report on Thursday, along with an updated report on second-quarter gross domestic product. On Friday, the government will release another report on personal income and spending that will help provide more insight into where and how inflation is affecting consumer spending. .
