Asian stocks fall for third straight day on economic growth fears

South Korean Financial Markets (Copyright 2022 The Associated Press. All rights reserved).

Asian stocks fell for a third day on Friday after more rate hikes by the Federal Reserve and other central banks to rein in persistent inflation sparked fears of a potential global recession.

Shanghai, Hong Kong, Seoul and Sydney all declined. Oil prices fell. Japanese markets were closed for holidays.

Wall Street’s benchmark S&P 500 index fell for a third day on Thursday after rate hikes by the central banks of Britain, Switzerland, Turkey and the Philippines. The Fed raised its key rate on Wednesday for the fifth time this year and indicated more hikes were on the way.

“Global equities are struggling as the world anticipates that higher rates will trigger a much earlier and possibly severe global recession,” Oanda’s Edward Moya said in a report.

The Shanghai Composite Index lost less than 0.1% to 3,107.88 and Hong Kong’s Hang Seng sank 0.4% to 18,064.67. Seoul’s Kospi fell 1.8% to 2,290.54.

Sydney’s S&P-ASX 200 fell 2% to 6,567.30 and India’s Sensex opened 1.1% lower at 58,467.75. New Zealand and Southeast Asian markets declined.

The S&P 500 lost 0.8% on Thursday at 3,757.99. The Dow Jones Industrial Average fell 0.4% to 30,076.68 and the Nasdaq Composite slipped 1.4% to 11,066.81.

Also on Friday, Vietnam’s central bank raised a key lending rate by a full percentage point, surprising forecasters. The State Bank of Vietnam appeared to be trying to cool inflation while also discouraging an outflow of capital in search of higher interest rates abroad.

Investors fear that the Fed and other central banks are willing to tolerate a painful downturn in economic activity to control prices.

Some point to signs that the US economy is cooling as support for the Fed to backtrack on plans for more rate hikes. But Chairman Jerome Powell said Wednesday that the Fed will keep rates high for an extended period of time if it is necessary to bring inflation back to its 2% target.

US consumer inflation eased to 8.3% in August from a peak of 9.1% in the previous month. But core inflation, which excludes volatile food and energy prices to give a clearer picture of the trend, rose to 0.6% from a month earlier, compared with a 0.3% rise in July. That indicated that the pressure for prices to rise was still strong.

The Fed on Wednesday raised its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%. It released a forecast showing it expects the benchmark rate to be 4.4% by the end of the year, a full point higher than forecast in June.

Traders are also awaiting quarterly financial results from large companies.

In energy markets, benchmark US crude fell 25 cents to $83.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 55 cents to $83.49 on Thursday. Brent crude, used to set international oil prices, fell 28 cents to $89.25 a barrel in London. It was up 63 cents the previous session at $90.46.

The dollar fell to 142.18 yen from 142.49 yen on Thursday. The euro fell to 98.23 cents from 98.31 cents.

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