BEIJING, Sept. 30 (BNA): Asian stocks fell again on Friday after German inflation soared, British Prime Minister Liz Truss defended a tax cut plan that has rattled investors and sluggish Chinese factory activity. Shanghai, Tokyo, Hong Kong and Sydney fell. Oil prices fell.
Wall Street’s benchmark S&P 500 fell 2.1% Thursday to its lowest level in nearly two years after strong US jobs data boosted expectations that the Federal Reserve will stick to its interest rate hike plans.
Investors are increasingly concerned that the global economy may slip into recession after interest rate hikes by the Federal Reserve and central banks in Europe and Asia to cool multi-decade inflation.
Global export demand has weakened, and Russia’s attack on Ukraine has disrupted oil and gas markets, according to the Associated Press.
Markets fell on Thursday after Germany reported inflation accelerated in September to 10.9% and Chancellor Olaf Scholz said the world’s fourth-largest economy faces a “double whammy” as energy prices soar.
Investors were already uneasy about signs of weak global activity before the Truss government announced billions of dollars in tax cuts. Traders are concerned that this will drive up already high inflation, forcing the Bank of England to cool economic growth by raising interest rates further.
Stock markets and the value of the British pound rebounded on Wednesday after the Bank of England said it would buy government bonds to support their prices.
But markets resumed their slide on Thursday after Truss shrugged off criticism and defended her plan to cut taxes despite a plea from the International Monetary Fund to reverse course.
On Wall Street, the S&P 500 fell to 3640.47. More than 90% of stocks in the index have fallen, putting it on track for the end of September with an 8% loss for the month.
The Dow Jones Industrial Average fell 1.5% to 29225.61 and the Nasdaq Composite lost 2.8% to 10,737.51.
The S&P 500 is down more than 20% for the year as investors await a break in inflation that has prompted the Federal Reserve to raise interest rates five times.
Stronger-than-expected US employment data on Thursday reinforced expectations that the Federal Reserve will feel comfortable sticking with plans to raise interest rates further and keeping them elevated over the next year.
In China, surveys of manufacturers conducted by business news magazine Caixin found that production orders and news had declined. This was in line with expectations that China’s manufacturing boom would be quelled by weak global demand.
In energy markets, benchmark US crude lost 32 cents to $80.91 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 92 cents Thursday to $81.23.
Brent crude, used in global oil pricing, was down 35 cents at $86.83 a barrel in London. It lost 83 cents in the previous session to $88.49.
The dollar rose to 144.59 yen from 144.43 yen on Thursday. The euro rose to 98.07 cents from 97.90 cents.
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