Asian stocks follow Wall St decline as inflation fears drag on

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BANGKOK — Stocks skidded in Asia on Wednesday after another sharp drop on Wall Street as markets remained plagued by uncertainty over inflation, rising interest rates and the potential for a recession.

US futures rose slightly as oil prices retreated.

A weaker-than-expected US consumer confidence reading highlighted deteriorating consumer expectations due to persistently high inflation.

This “took equities lower as sentiment deteriorated for risky assets,” said Anderson Alves of ActivTrades, in a commentary.

Investors await comments later in the day from Federal Reserve Chairman Jerome Powell and other top central bankers, he said.

Tokyo’s Nikkei 225 lost 1% to 26,769.52 while Seoul’s Kospi fell 1.4% to 2,386.88. The Hang Seng in Hong Kong fell 1.6% to 22,053.86. The Shanghai Composite Index fell 0.8% to 3,383.05.

Australia’s S&P/ASX 200 fell 1.1% to 6,692.50. Bangkok and India also declined.

On Tuesday, the S&P 500 ended down 2% at 3,821.55, while the Dow Jones fell 1.6% to 30,946.99. The tech-heavy Nasdaq slipped 3% to 11,181.54.

The Russell 2000 is down 1.9% at 1,738.84. The indices are all on pace with losses of 6% or more in June.

About 85% of stocks in the benchmark S&P 500 index closed in the red. Technology, communications and healthcare stocks accounted for much of the decline. Retailers and other businesses that rely on direct consumer spending also helped drag the index down. Energy stocks, the only sector in the index to post gains this year, rose as crude oil prices rose.

The Conference Board reported that its consumer confidence index fell in June to its lowest level in more than a year, a result much weaker than economists had expected.

Investors face a pervasive list of concerns centered on rising inflation that is squeezing businesses and consumers. The supply chain issues that have been driving inflation higher have been compounded in recent months by increased restrictions in China related to COVID-19.

Companies have raised the prices of everything from food to clothing. Russia’s invasion of Ukraine in February put even more pressure on consumers by raising energy prices and sending gasoline prices to record highs.

Consumers were already shifting their spending from goods to services as the economy recovered from the impact of the pandemic, but intensifying inflation pressure caused a sharper shift in discretionary items like electronics to basic necessities.

Central banks are raising rates in an attempt to temper inflation after years of keeping rates low to spur economic growth, but investors fear they could go too far and push economies into a recession.

Investors await expected midweek remarks from central bank leaders, including Fed Chairman Jerome Powell and European Central Bank chief Christine Lagarde. They will also receive another update on U.S. economic growth on Wednesday when the Commerce Department releases a first-quarter gross domestic product report.

Wall Street is also gearing up for the latest round of corporate earnings in the coming weeks, which will help paint a clearer picture of how companies are coping with pressure from rising costs and consumers cutting back on some spending. .

Sports footwear and apparel giant Nike fell 7% after giving investors a cautious update on the potential impact on earnings due to lockdowns in China. The company depends on China for about 17% of its revenue, according to FactSet.

Wynn Resorts rose 3.2% and Las Vegas Sands gained 4%. The companies, which have major gambling businesses in China, received a boost after China eased a quarantine requirement for people arriving from overseas.

Technology and communications companies were among the biggest losers on Tuesday. Microsoft fell 3.2% and Apple 3%. Alphabet, Google’s parent company, fell 3.3%.

Energy stocks made strong gains as US crude oil prices rose 2%.

In other exchanges on Wednesday:

The yield on the 10-year Treasury note, which helps set mortgage rates, fell to 3.17% from 3.19%.

Benchmark U.S. crude oil slid 54 cents to $111.22 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude fell 62 cents to $113.18 a barrel.

The dollar fell to 136.03 Japanese yen from 136.12 yen on Tuesday night. The Euro weakened to $1.0509 from $1.0522.

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AP Business Writers Damian J. Troise and Alex Veiga contributed.

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