TOKYO (AP) — Asian stocks fell on Friday, following losses on Wall Street after Federal Reserve Chairman Jerome Powell indicated interest rate hikes needed to be faster to fight inflation. .
Major indexes fell in cascade across Asia, with a steep decline of nearly 2% in Tokyo. Data from Japan’s consumer price index showed an increase for the seventh consecutive month, although the results were in line with market expectations.
Japan’s benchmark Nikkei 225 fell 1.9% to 27,033.33. Australia’s S&P/ASX 200 fell 1.6% to 7,468.30. The South Korean Kospi fell 1.2% to 2,696.72. Hong Kong’s Hang Seng slipped 1.1% to 20,454.17, while the Shanghai Composite edged down 0.3% to 3,071.63.
Japanese Finance Minister Shunichi Suzuki made comments seen as a somewhat tougher reaction to ‘sudden moves’ in exchange rates after meeting Treasury Secretary Janet Yellen on the sidelines of G20 finance ministers’ meetings .
The US dollar fell from 128.36 yen to 128.57 Japanese yen early on Friday. The euro traded at $1.0842, falling from $1.0840.
Intervention, particularly from the United States, could be imminent, said Stephen Innes of SPI Asset Management.
“The BOJ should remain firm in its ultra-dovish monetary policy approach relative to its peers which implicitly welcomes yen depreciation,” he said, referring to Japan’s central bank.
But the main cause of the dollar’s rise against the yen and other currencies, a widening interest rate gap in Japan and some other Asian countries and rising interest rates in the United States, should not subside.
At a roundtable hosted by the International Monetary Fund, Fed Chairman Jerome Powell said the Fed needed to act faster than it has done before to deal with high inflation, suggesting that sharp interest rate hikes are likely in the months ahead.
Powell’s remarks helped push stocks down on Wall Street. The S&P 500 closed down 1.5% at 4,393.66 after rising 1.2% at the start. The Dow Jones Industrial Average fell 1% to 34,792.76 and the Nasdaq slipped 2.1% to 13,174.65.
Small company stocks fell more than the broader market. The Russell 2000 is down 2.3% at 1,991.46.
“Under the weight of war, global energy and food risks, stock markets may well begin to collapse, unfortunately quite dramatically. We’ve been saying for some time that the only way to protect your investment portfolio is to be conservative on stocks and buy gold, oil and the US dollar,” said Clifford Bennett, Chief Economist at ACY Securities.
The market as a whole has had a choppy week as investors scrutinize the latest round of corporate earnings amid lingering concerns over rising inflation and the Fed’s exit from an interest rate policy. ultra-low interest.
The Fed has already announced a quarter-percentage-point rate hike, and Wall Street expects a half-percent rate hike at its next meeting in two weeks. Other central banks have also moved to raise interest rates in an attempt to lessen the impact of higher prices on businesses and consumers.
During Thursday’s roundtable, Powell suggested that “there’s something about preloading” aggressive rate hikes as the Fed grapples with inflation that has peaked in four decades.
That suggests a half-point rate hike could be on the table when Fed officials hold their next interest rate and economic policy meetings on May 3-4, Powell said. In the past, the Fed has typically raised its short-term policy rate in more modest quarter-point increments.
More than 80% of S&P 500 stocks fell on Thursday, with tech stocks accounting for much of the decline. The expensive valuations of many of the biggest tech companies give them more leverage to steer the broader market up or down. Microsoft fell 1.9% and chipmaker Nvidia fell 6%.
American airlines gained 3.8% after telling investors it expects second-quarter profits as more people return to travel.
You’re here rose 3.2% after the maker of electric cars and solar panels reported strong sales and a sevenfold increase in profits despite global supply chain issues.
Bond yields gained ground as investors brace for higher interest rates. The 10-year Treasury yield rose significantly to 2.97% on Friday from 2.92% Thursday night. hovering near its highest levels since late 2018.
Benchmark U.S. crude fell 65 cents to $103.14 a barrel. It rose 1.6% on Thursday and is up about 40% for the year. This has made gasoline more expensive, further reducing consumers’ wallets. Brent crude, the international standard, fell 64 cents to $107.69 a barrel.
AP Business Writers Damian J. Troise and Alex Veiga contributed.
Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.