After price data Asian markets open lower slam Wall Street

by Sara Floyd Hello

As a report after Wall Street fell the most since June 2020 showed that on the U.S. economy inflation has kept a surprisingly strong grip Asian markets on Wednesday skidded lower.

In early trading Wednesday Tokyo’s benchmark Nikkei 225 lost 2.8%, to 27,816.58, while Sydney’s S&P/ASX 200 declined 2.5% to 6,834.80. The Kospi lost 2.6% to 2,386.29, in Seoul.

For the Dow industrials and the S&P 500 up 0.1% the U.S. futures edged higher with the contracts. European futures also declined.

The Dow lost more than 1,250 points and the S&P 500 sank 4.3% on Tuesday, adding to risks for the economy. For the Federal Reserve to raise interest rates even more Tuesday’s hotter-than-expected report on inflation has traders bracing.

Over the past four days the steep sell-off didn’t quite knock out the market’s gains, but for the major U.S. indexes and erased an early rally in European markets it ended a four-day winning streak.

From 4.3% to 3,932.69 the S&P 500 sank. 3.9% to 31,104.97 the Dow fell and at 11633.57, the Nasdaq composite closed 5.2% lower.

Only to 8.3% in August after a report showed inflation decelerated, bond prices also fell sharply, sending their yields higher, instead of the 8.1% economists expected.

For Fed actions on the two-year Treasury the yield which tends to track expectations, soared to 3.74% from 3.57% late Monday. Other loans are heading, rising to 3.42% from 3.36% the 10-year yield, which helps dictate where mortgages and rates.

For the Federal Reserve to ultimately raise interest rates more than expected to combat inflation, with all the risks for the economy that entails the hotter-than-expected reading has traders bracing.

Brian Jacobsen, senior investment strategist at Allspring Global Investments said “It’s not the journey right now that’s a worry so much as the destination,”. “The big question is at what level if the Fed wants to hike and hold.

In the S&P 500 all but six of the stocks fell. They’re seen as most at risk from higher rates because technology and other high-growth companies fell more than the rest of the market.

By a hefty three-quarters of a percentage point at its meeting next week most of Wall Street came into the day thinking the Fed would hike its key short-term rate. But after peaking in June at 9.1% the hope was that inflation was falling back to more normal levels.

Through the end of this year such a slowdown might let the Fed reduce the size of its rate hikes and then potentially hold steady through early 2023.

Tuesday’s report dashed some of those hopes. Some the Fed pays particular attention to, such as inflation outside of food and energy prices including many of the data points were worse than economists expected.

Gargi Chaudhuri, head of investment strategy at iShares said that markets honed in on a 0.6% rise in such prices during August from July, double what economists expected.

The Fed will hike the benchmark rate by a full percentage point next week, quadruple the usual move, traders now see a one-in-three chance. In the futures market no one in the futures market was predicting such a hike a day earlier.

With the last two increases by three-quarters of a percentage point, the Fed has already raised its benchmark interest rate four times this year. Currently, the federal funds rate is in a range of 2.25% to 2.50%.

To buy a house, a car or anything else bought on credit higher rates hurt the economy by making it more expensive. Since 2008 mortgage rates have already hit their highest level, creating pain for the housing industry.

To snuff out high inflation the hope is that the Fed can pull off the tightrope walk of slowing the economy enough, but not so much that it creates a painful recession.

For Tuesday’s data such a “soft landing” casts doubt on hopes. For stocks, bonds and other investments higher rates also hurt prices.

The riskiest are the ones hardest hit by higher rates as well as the Investments seen as the most expensive. Bitcoin tumbled 9.4%.

For this year expectations for a more aggressive move by the Fed also helped the dollar add to its already strong gains. Other currencies in large part the dollar has been surging against because the Fed has been hiking rates faster and by bigger margins than many other central banks.

Late Tuesday the dollar bought 144.59 Japanese yen, up from 144.57 yen. The euro rose to 0.9973 cents, up from 0.9969 percent.

In electronic trading on the New York Mercantile Exchange Oil prices rose, U.S. benchmark crude added 38 cents to $87.69 per barrel. On Tuesday it lost 47 cents to $87.31. Brent crude, the international pricing standard, climbed 38 cents to $93.55 per barrel.

Source:- https://coinworldlive.com/after-price-data-asian-markets-open-lower-slam-wall-street/