Asian stocks tumble on German inflation, UK tax cuts
By JOE McDONALD, AP Business Writer
BEIJING (AP) — Asian stocks fell again on Friday after German inflation soared, British Prime Minister Liz Truss championed a tax cut plan that rattled investors and Chinese industry s is weakened.
Shanghai, Tokyo, Hong Kong and Sydney fell. Oil prices fell slightly.
Wall Street’s benchmark S&P 500 index fell 2.1% on Thursday to its lowest level in nearly two years after strong US jobs data bolstered expectations that the Federal Reserve will stick to plans for further interest rate hikes.
Investors are increasingly concerned that the global economy could tip into recession following interest rate hikes by the Fed and central banks in Europe and Asia to calm inflation that is in its highest for several decades. Global export demand is weakening and Russia’s attack on Ukraine has disrupted oil and gas markets.
Markets fell on Thursday after Germany announced September inflation had accelerated to 10.9% and Chancellor Olaf Scholz said the world’s fourth-largest economy faced a “double whammy” with soaring energy prices.
“We would be inclined to say we haven’t seen the bottom yet,” ING economists said in a report.
The Shanghai Composite Index fell 0.6% to 3,023.91 after surveys of manufacturers showed production and new orders fell in September.
The Nikkei 225 in Tokyo fell 1.7% to 25,979.75 and the Hang Seng in Hong Kong fell 0.2% to 17,126.01. The Kospi in Seoul added 0.2% to 2,173.71.
Sydney’s S&P ASX 200 fell 0.7% to 6,506.20. Markets in New Zealand and Southeast Asia declined.
Investors were already worried about signs of weakening global activity before the Truss government announced multibillion-dollar tax cuts. Traders fear this will drive up already high inflation, forcing Britain’s central bank to slow economic growth by raising interest rates further.
Stock markets and the value of the pound rebounded on Wednesday after the Bank of England said it would buy government bonds to support their price. But markets resumed their slide on Thursday after Truss shrugged off criticism and defended his tax cut plan despite a call from the International Monetary Fund to reverse the trend.
On Wall Street, the S&P 500 fell to 3,640.47. More than 90% of stocks in the index fell, putting it on track to end September with an 8% loss for the month.
The Dow Jones Industrial Average fell 1.5% to 29,225.61 and the Nasdaq composite lost 2.8% to 10,737.51.
The S&P 500 is down more than 20% for the year as investors wait for a break in inflation that prompted the Fed to raise interest rates five times.
The yield on a two-year US Treasury note, or the difference between its market price and the payment at maturity, widened to 4.2% from 4.14% on Wednesday.
Stronger-than-expected U.S. jobs data on Thursday bolstered expectations that the Fed will feel comfortable sticking to plans for further interest rate hikes and keeping them elevated through the coming months. next year.
Fewer workers applied for unemployment benefits last week than expected.
In China, surveys of manufacturers by business news magazine Caixin found that production and new orders had fallen. This was in line with expectations that a Chinese manufacturing boom would fade due to weak global demand.
The monthly Caixin Purchasing Managers’ Index fell from its August level while a separate index from the China Logistics and Purchasing Federation edged above a breakeven point that shows rising activity.
“The slowdown in external demand is expected to worsen,” Capital Economics’ Zichun Huang said in a report.
In energy markets, benchmark U.S. crude fell 9 cents to $81.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 92 cents on Thursday to $81.23. Brent crude, used to price international oils, fell 10 cents to $87.08 a barrel in London. It was down 83 cents the previous session at $88.49.
The dollar rose to 144.70 yen from 144.43 yen on Thursday. The euro fell from 97.90 cents to 98.05 cents.
Copyright 2022 The Associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.