TOKYO (AP) – Asian equities mostly fell on Wednesday as investors looked forward to a widely expected interest rate hike from the US Federal Reserve as it works to crack down on higher inflation in decades.
Japan’s Nikkei 225 benchmark fell 1.4% in morning trading to 27,308.66. The Australian S & P / ASX 200 fell 1.4% to 6,712.40. South Korea’s Kospi lost 0.9% to 2,346.62. Hong Kong’s Hang Seng lost 1.4% to 18,524.48, while the Shanghai Composite slid 0.2% to 3,115.08.
Global tensions add to uncertainties. The Russian-controlled regions of eastern and southern Ukraine have announced plans to start voting this week to become an integral part of Russia.
Kremlin-backed efforts to engulf four regions could pave the way for Moscow to escalate the war against Ukraine. Russian President Vladimir Putin recently blew up what he described as US efforts to preserve their global dominance and ordered officials to increase weapons production.
“Asian stocks were trading defensively on Wednesday. There have been some geopolitical tensions regarding Russia and Ukraine, where separatists will hold a referendum in some regions, and traders were expecting an update from Putin, “Anderson Alves told ActivTrades.
On Wall Street, the S&P 500 Index fell 1.1% to 3,855.93 as more than 90% of the stocks and all sectors of the benchmark index lost ground. The Dow Jones Industrial Average lost 1% to 30,706.23. The Nasdaq composite also fell 1%, to 11,425.05.
The sell came as traders waited to see how high the Fed will raise interest rates in its meeting which ends on Wednesday.
“The market is definitely preparing for the worst and there is some selling pressure coming,” said Paul Kim, CEO of Simplify ETFs.
Retailers, tech stocks, healthcare companies, and banks were among the heaviest weights in the market. Best Buy fell 4.1%, Microsoft fell 0.8%, Abbott Laboratories fell 1.7%, and JPMorgan Chase closed 2% lower. Exxon Mobil fell 0.8%.
Shares of smaller companies fell more than the broader market. The Russell 2000 Index fell 1.4% to 1,787.50.
Bond yields have mostly risen. The 10-year Treasury yield, which affects mortgage rates, rose to 3.56% from 3.52% last Monday and is trading at its highest levels since 2011.
The 2-year Treasury yield, which tends to follow expectations for Fed stock, remained stable at 3.95%, hovering around the highest levels since 2007.
Equities plummeted and Treasury yields rose as the Fed raises the cost of borrowed money in hopes of slowing the hottest inflation of the past four decades.
Fed Chairman Jerome Powell bluntly warned in a speech last month that rate hikes would “bring some pain”.
“He has done everything he can to signal that it will be another aggressive move,” said Liz Young, SoFi’s head of investment strategy.
The Fed is expected to raise its key short-term rate by three-quarters of a point for the third time at its meeting on Wednesday. This would raise its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level in the past 14 years, and from zero at the beginning of the year.
Beyond that, investors will focus on what Powell has to say, both in the Fed’s latest interest rate policy statement and at an afternoon press conference, to get clues as to whether the central bank remains primarily focused on. lowering inflation, or if there is a clue the Fed is paying more attention to the impact of higher rates on the economy.
Wall Street fears that rate hikes may go too far in slowing economic growth and pushing the economy into recession.
Ford It fell 12.3% on the largest drop in the S&P 500 after cutting its third-quarter earnings forecast because a shortage of parts will leave it with a whopping 45,000 unfinished vehicles in its lots when the quarter ends on September 30. Last week, FedEx and General Electric have warned investors about the damage inflation causes to their operations.
The United States is not alone in suffering from high inflation or facing the impact of efforts to combat high prices.
The Bank of Japan began a two-day monetary policy meeting on Wednesday, although analysts expect the central bank to stick to its accommodative monetary policy. The rate decisions of Norway, Switzerland and the Bank of England are forthcoming.
In energy trading, US benchmark crude rose 15 cents to $ 84.09 a barrel in e-commerce on the New York Mercantile Exchange. It fell 1.5% on Tuesday, weighing down energy stocks. Brent crude, the international standard, added 22 cents to $ 90.84 a barrel.
In currency trading, the US dollar rose to 143.81 Japanese yen from 143.74 yen. The euro fell to 99.64 cents from 99.73 cents.
AP Business writers Damian J. Troise and Alex Veiga contributed to this report.
Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama