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Sept. 13, 2022, 11:52 p.m. EDT

Asian markets dive lower after Wall Street slammed by inflation data

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By Associated Press

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

A report Tuesday showed U.S.  inflation decelerated only to 8.3% in August , instead of the 8.1% economists expected. That dashed hopes that inflation was falling back to more normal levels after peaking in June at 9.1%, allowing the Federal Reserve to moderate its interest rate hikes.

Tensions between the U.S. and China also were weighing on sentiment. Chinese leader Xi Jinping and Russian President Vladimir Putin are due to meet later in the week,  underscoring the countries’ warming ties  as the West pushes ahead with sanctions against Moscow for its invasion of Ukraine.

The meeting Thursday in Samarkand,  Uzbekistan, on the sidelines of a summit of a security pact dominated by Moscow and Beijing, reflect the strong ties between the former Communist rivals now locked in rivalry with the U.S.

The U.S. is meanwhile reportedly considering new sanctions against Beijing aimed at deterring  aggression against Taiwan,  a self-governed island democracy that China claims as its own territory.

Tokyo’s benchmark Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK -0.35% lost 2.2% in early trading Wednesday, while Sydney’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.24% declined 2.3%. In Seoul, the Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.14% lost 1.7%. Hong Kong’s Hang Seng index /zigman2/quotes/210598030/delayed HK:HSI -0.49% dropped 2.5%, and the Shanghai Composite dipped 1%. Benchmark indexes in Singapore /zigman2/quotes/210597985/delayed SG:STI -0.26% , Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 -0.04% , Malaysia /zigman2/quotes/210598052/delayed MY:FBMKLCI -1.02% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX -0.39% all fell.

U.S. futures edged higher, with the contracts for the Dow industrials /zigman2/quotes/210407078/delayed YM00 +0.49% and the S&P 500 /zigman2/quotes/209948968/delayed ES00 +0.03% up 0.1%.

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

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

The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.03% sank 4.3% to 3,932.69. The Dow /zigman2/quotes/210598065/realtime DJIA +0.45% fell 3.9% to 31,104.97 and the Nasdaq composite /zigman2/quotes/210598365/realtime COMP -0.52% closed 5.2% lower, at 11,633.57.

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

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

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

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

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

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

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

JP : Nikkei
-100.06 -0.35%
Volume: 0.00
Nov. 25, 2022 3:15p
+17.70 +0.24%
Volume: 552,057
Nov. 25, 2022 4:55p
KR : Korea Exchange
-3.47 -0.14%
Volume: 438,394
Nov. 25, 2022 3:30p
HK : Hong Kong Exchange
-87.32 -0.49%
Volume: 3.18M
Nov. 25, 2022 4:08p
SG : Singapore: SGX
-8.33 -0.26%
Volume: 0.00
Nov. 25, 2022 5:20p
TW : Taiwan Stock Exchange
-5.49 -0.04%
Volume: 0.00
Nov. 25, 2022 1:33p
MY : Malaysia
-15.34 -1.02%
Volume: 0.00
Nov. 25, 2022 5:05p
ID : Indonesia Stock Exchange
-27.37 -0.39%
Volume: 0.00
Nov. 25, 2022 3:00p
$ 34,380.00
+169.00 +0.49%
Volume: 97,777
Nov. 25, 2022 12:14p
US : U.S.: CME
$ 4,034.25
+1.25 +0.03%
Volume: 564,882
Nov. 25, 2022 12:14p
-1.14 -0.03%
Volume: 0.00
Nov. 25, 2022 2:32p
US : Dow Jones Global
+152.97 +0.45%
Volume: 0.00
Nov. 25, 2022 2:32p
US : Nasdaq
-58.96 -0.52%
Volume: 2.22B
Nov. 25, 2022 4:30p
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