By ELAINE KURTENBACH, AP Business Writer
Shares fell in Asia on Thursday after the release of worse-than-expected inflation data triggered heavy selling in Wall Street technology stocks.
The Hong Kong benchmark fell 2.2% to 19385.47 following the arrest of several prominent democracy advocates, including a retired Roman Catholic cardinal.
The arrests of Cardinal Joseph Zen, singer Denise Ho and others follow last week’s selection of a hard-line chief executive for China’s semi-autonomous territory, over which Beijing is tightening controls.
More broadly, markets focused on inflation as central banks weakened support for economies launched during the pandemic. The U.S. Federal Reserve, for example, has aggressively refused to raise interest rates after seeing high inflation take longer than expected.
Wednesday’s report from the U.S. Labor Department showed that inflation slowed to a touch in April, to 8.3% from 8.5% in March. Investors have also seen some glass half-full data signals suggesting that the consumer price index, or CPI, may peak and improve further, but the numbers even higher than economists predicted.
“The consensus is that inflation has risen, at least in the U.S. A floor for global equity markets depends on how fast U.S. CPI inflation falls,” Stephen Innes of SPI Asset Management said in a in the comments.
Producer prices than later on Thursday.
In other Asian trades, Tokyo’s Nikkei 225 gave up 1.8% to 25,748.72.
The Shanghai Composite index declined 0.5% to 3,043.59. Australia’s S & P/ASX 200 lost 1.6% to 6,936.90. South Korea’s Kospi was down 1.5% to 2,552.45.
On Wednesday, an early rally was lost, leaving the S&P 500 1.6% down 3,935.18. That erases wins from a day earlier, when the benchmark index cut a three -day consecutive loss.
The Dow Jones Industrial Average fell 1% to 31,834.11. The Nasdaq fell 3.2% to 11,364.24 as tech stocks weighed in on the broader market. The three major indices are each on pace for another sharp weekly loss.
The company’s small stocks also lost ground. Russell 2000 fell 2.5% to 1,718.14.
Economists say the inflation report will keep the Fed on track for a rapid and possibly sharp rise in interest rates in the coming months, even if the data leads to poor trading on Wall Street.
Treasury yields initially jumped but cut their gains as the morning progressed. Treasury’s 10 -year yield rose as high as 3.08% overnight but fell back to 2.90% early Thursday.
To corral high inflation, the Fed has already pulled the key to its short-term interest rate from a record low of almost zero, where it has spent most of the pandemic. It also said it could continue to raise rates to double the usual amount at future meetings.
Such moves are designed to slow the economy to help eliminate inflation, but the Fed’s risks cause a recession if it raises rates too high or too quickly. Higher fees are likely to pull the prices of stocks and all types of investments lower than they are currently. Higher yield, safe Treasury bonds, for example, have become more attractive to investors.
Higher rates make large technology companies, other high -growth stocks and even cryptocurrencies relatively less attractive. The Nasdaq’s loss of more than 27% so far this year is worse than the nearly 17% drop for the S&P 500, for example.
In addition to interest rates, in China, closures intended to curb COVID raise the risk of multiple supply chain disruptions for global companies and a slowdown in the world’s second -largest economy.
The war in Ukraine, on the other hand, threatens to keep inflation high due to the disruption of oil and natural gas markets.
U.S. benchmark oil fell $ 2.04 to $ 103.67 per barrel in electronic trading on the New York Mercantile Exchange. It gained 6% on Wednesday.
Brent crude, the international pricing standard, dropped $ 1.97 to $ 105.54 per barrel. It increased 4.9% on the previous day.
In currency trading, the dollar fell to 129.62 Japanese yen from 129.95 yen. The euro fell to $ 1.0506 from $ 1.0517.
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