Asian shares stumble on growth worries as central banks tighten

Shanghai, May 26 (BNA): Asian stock markets fell on Thursday, minutes after the Federal Reserve’s meeting in early May showed a majority in favor of raising interest rates by half a percentage point in June and July, as persistent concerns about global growth sapped confidence.

While the minutes also highlighted policy makers’ confidence in the strength of the US economy, helping lift the mood on Wall Street overnight, sentiment in stock markets remains fragile after weeks of choppy trading with more global central banks continuing their tightening path. , according to Reuters reports. .

“I don’t think the global economy is in danger of slowing, and I think we’re slowing. For that reason, the potential for a good investment right now is mostly on the short side,” said Barbara Ann Bernard, chief information officer at Wincrest Capital, a global strategy hedge fund. Long and Short Stocks, for the Reuters Global Markets Forum.

South Korea’s central bank on Thursday raised interest rates for a second consecutive meeting as it battles consumer inflation at a 13-year high.

All participants at the May 3-4 Fed meeting supported a half percentage point increase in the rate – the first of this size in more than 20 years – and “most participants” felt that further increases of this size were “likely appropriate” in The Fed’s policy meetings are in June and July, according to meeting minutes.

The minutes reflected policy makers’ agreement on the strength of the US economy, a tight labor market and high inflation, with global supply problems, the Ukraine war and continuing coronavirus lockdowns in China turning inflationary risks “to the upside”.

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Investors’ continued concern about these factors sent MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.54% after trading higher in the early morning.

China’s blue-chip owners fell 1.11% despite another drop in daily COVID-19 cases in the country, as shutdowns aimed at curbing the spread of the virus threaten to undermine recent economic support measures.

Chinese Premier Li Keqiang said on Wednesday that China will strive to achieve reasonable economic growth in the second quarter and stem rising unemployment, Xinhua news agency reported.

Australian shares fell 0.47% while Japan’s Nikkei index reversed earlier gains to hit 0.13%.

The Kospi in Seoul rose 0.25% after the central bank announced an interest rate in line with expectations.

The declines in Asia contrasted with the more optimistic mood on Wall Street, with the Dow Jones Industrial Average (.DJI) up 0.6%, the S&P 500 up 0.95%, and the Nasdaq Composite adding 1.51%.

“I think the market is looking to stabilize here and look a little bit forward to the point where the Fed could start issuing some different guidance and say the economy has slowed enough that they don’t see the need to keep raising rates,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

After rising on Wednesday after the Federal Reserve’s meeting minutes, the dollar was little changed in Asian trade. It was barely changed against the yen at 127.27, while the euro was up 0.11% to 1.0692%.

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The dollar index, which measures the greenback against a basket of major currencies, was down just 0.03% at 102.02.

Moves in US Treasury yields were also muted. The 10-year bond yield rose to 2.7577% from a close of 2.747%, and the policy-sensitive two-year yield settled at 2.506%.

Crude oil settled after a cautious rally this week, with Brent crude settling at $114.03 a barrel and US crude rising 0.13% to $110.47.

Spot gold was down 0.2% at $1,849.19 an ounce.

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