Asian stocks fell on Wednesday amid concerns about China's economic performance and the future of the US economy. The Nikkei 225 fell 1.1% in morning trading to 31,879.84. The S&P/ASX 200 in Australia fell 1.4% to 7,204.00. The Kospi in South Korea fell 1.2% to 2,539.48. The Hang Seng index fell 1.2% to 18,364.11, while …
Asian stocks fell on Wednesday amid concerns about China’s economic performance and the future of the US economy. The Nikkei 225 fell 1.1% in morning trading to 31,879.84. The S&P/ASX 200 in Australia fell 1.4% to 7,204.00. The Kospi in South Korea fell 1.2% to 2,539.48. The Hang Seng index fell 1.2% to 18,364.11, while the Shanghai Composite fell 0.7% to 3,153.43.
Earlier today, New Zealand’s central bank maintained its benchmark interest rate at 5.5%. The Reserve Bank of New Zealand’s monetary policy committee stated that while headline inflation had decreased, core inflation remained excessively high. The group predicted that it will require a long period of reduced spending to eliminate inflationary pressures. The New Zealand dollar was little altered in response to the announcement, trading at approximately $0.6.
On Wall Street, the S&P 500 fell 1.2%, the most since the spring, as data showed the world’s second-largest economy’s decline intensifying. The Dow Jones Industrial Average fell 361 points, or 1%, while the Nasdaq Composite fell 1.1%.
The hope heading into this year was that China’s economy would grow sufficiently after the government lifted anti-COVID regulations to support a global economy weakened by excessive inflation. However, China’s recovery has stalled to the point where it unexpectedly lowered a key interest rate on Tuesday and missed a report on how many of its younger people are out of job.
Concerns about the ripple effects on the rest of the global economy are weighing on Wall Street, where equities have already begun to fall since August. The reduction comes after a frenzied first seven months of the year, which critics deemed excessive. Despite increased interest rates, the US economy has shown to be more resilient than projected. According to a survey released on Tuesday, retail sales in the U.S. increased faster than economists predicted in July. The strong retail sales figure strengthens confidence that the U.S. economy will continue to develop and avoid the long-foreseen recession. On the downside for markets, it may strengthen the Fed’s determination to keep interest rates high in order to fully grind down inflation.
The Fed’s benchmark interest rate has already been raised to its highest level in more than two decades. High interest rates work by dragging down the entire economy and lowering investment values. Treasury rates first climbed in response to the retail sales report, touching their highest levels since the Great Recession of 2007-09, before bouncing up and down.
A slowing Chinese economy may reduce demand for oil and other commodities. In the oil market, benchmark U.S. crude fell 7 cents to $80.92 a barrel. On Tuesday, the price of a barrel of U.S. crude oil fell $1.52 to $80.99. Brent crude, the worldwide benchmark, dropped 7 cents to $84.82 a barrel. Due to the fall, energy producers’ equities were among the worst performers in the S&P 500. Exxon Mobil’s 2.6% decline was one of the index’s larger weights. Banks also fell, continuing a bumpy run that began with several high-profile failures in the spring, which were triggered in part by rising interest rates.
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