Stocks fall as fears for global growth rise


FILE PHOTO – An investor sits in front of a board displaying stock information at a brokerage office in Beijing, China December 7, 2018. REUTERS/Thomas Peter

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BEIJING/HONG KONG, May 19 (Reuters) – Asian stocks fell on Thursday, following a sharp sell-off on Wall Street, as investors worried about global inflation, China’s zero-COVID policy and the war in Ukraine, while the safe haven dollar eased.

European stock markets also looked set for another tough day. Pan-regional Euro Stoxx 50 futures fell 0.52%, German DAX futures fell 0.63% while FTSE futures fell 0.51%.

Nasdaq futures fell 0.15%, although S&P500 futures reversed earlier losses to be 0.05% higher.

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Overnight on Wall Street, retail giant Target Corp warned of a bigger margin hit due to rising costs as it reported quarterly profit fell A half. Its shares plunged 24.88%. The Nasdaq fell almost 5% while the S&P 500 lost 4%.

“Tuesday’s rebound turned out to be ‘too bullish’, so the self-doubt resulting from the misjudgment only causes traders to hit the sell button even harder,” said Hebe Chen, market analyst at IG.

MSCI’s broadest Asia Pacific ex-Japan equity index (.MIAPJ0000PUS) posted four days of gains and fell 1.8%, led by a 1.5% loss for the wealthy Australian index. resources (.AXJO), a 2.1% decline in Hong Kong stocks (.HSI) and a 0.3% decline in mainland China bluechips (.CSI300).

The Japanese Nikkei (.N225) lost 1.7%.

Hong Kong-listed tech giants (.HSTECH) were particularly hard hit, with the index falling more than 3%. Tencent (0700.HK) fell more than 6% after posting no revenue growth in the first quarter, its worst performance since its IPO in 2004. Read more

China’s tech sector is still reeling from a year-long government crackdown and a slowing economic outlook resulting from Beijing’s strict zero COVID policy, even as Vice Premier Liu He’s soothing comments to leaders of technology had boosted sentiment on Wednesday. Read more

Two US central bankers say they expect the Federal Reserve to downgrade to a more measured pace of policy tightening after July as it seeks to stifle inflation without raising borrowing costs so high that they plunge the economy into recession. Read more

“It must be said that the worry about inflation has never gone away since we entered 2022. However, although things have not reached the point of no return, they seem to be heading towards the” out of control. This is probably the most worrying part for the market,” IG’s Chen said.

The U.S. dollar, which had rallied on lower risk appetite, eased 0.15% against a basket of major currencies, after jumping 0.55% overnight. ended a three-day losing streak.

The Aussie gained 0.8%, while the New Zealand kiwi rebounded 0.6% as an easing of the COVID lockdown in Shanghai helped sentiment.

Data on Wednesday showed UK inflation hit its highest annual rate since 1982 as energy bills soared, while Canadian inflation hit 6.8% last month, in largely due to rising food and housing prices.

Bilal Hafeez, CEO of London-based research firm MacroHive, said there was currently a strong preference for safe-haven assets, especially cash.

“There may be short-term rallies in equities like the past few days, but overall the era of low yields is over and we are moving into a higher rate environment,” Hafeez told Reuters Global. Market Forum.

“This will put pressure on all markets that have benefited from weak returns – especially equities.”

US Treasuries rallied overnight and remained largely flat in Asia, leaving the benchmark 10-year Treasury yield at 2.9076%.

The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 2.6800% from a US close of 2.667%.

Oil prices rallied after early losses as lingering fears of a tight global supply outweigh fears of slowing economic growth.

Brent crude rose 1.2% to $110.41 a barrel, while U.S. crude rose 0.8% to $110.48 a barrel.

Gold was slightly lower. Spot gold was trading at $1,814.88 an ounce.

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Additional reporting by Divya Chowdhury; Editing by Sam Holmes, Kenneth Maxwell and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.


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