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STOCK MARKETS TODAY: Wall Street sinks on rate fears, Asian stocks fall
Asian stocks were mostly lower on Wednesday after Wall Street snapped its record bull run with its worst day in weeks. Hong Kong's Hang Seng Index fell 1.1% to 16,753.82, while Shanghai's Composite Heel Index dropped 0.2% to 3,070.04. Analysts said that despite recent relatively positive economic signs from China, there is growing concern that the sentiment that has panicked Wall Street could spread to Asia.
TOKYO (AP) - Asian stocks were mostly lower Wednesday after Wall Street snapped its record bull run with its worst day in weeks.
Japan's benchmark Nikkei 225 index fell 0.8% to 39,511.88 points. Sydney's S&P/ASX 200 fell 1.3% to 7,782.50. Korea's Kospi fell 1.4% to 2,714.18 points. Hong Kong's Hang Seng Index fell 1.1% to 16,753.82 and Shanghai's Composite Heel Index fell 0.2% to 3070.04.
Analysts say that despite the recent relatively positive signs in the Chinese economy, there is growing concern that the sentiment that has terrified Wall Street could spread to Asia.
"Investors are grappling with the possibility that this upheaval could mark the beginning of a more significant market correction," said Stephen Innes, executive partner at SPI Asset Management.
China has set an ambitious target of around 5% of economic growth this year in an attempt to shake off the recent struggles in the real estate sector and the devastating effects of the pandemic period.
On Wall Street, the S&P 500 fell 37.96 points, or 0.7%, to 5205.81, its worst day in four weeks. It was the second consecutive decline for the S&P 500 after hitting a new closing all-time high last week.
Other indexes fared worse. The Dow Jones Industrial Average fell 396.61 points, or 11 TP3T, to 39,170.24, also falling further below its all-time record. The NASDAQ Composite Resonance Index fell 156.38 points, or 1%, to 16,240.45, while small caps in the Russell 2000 Index lost 1.8%.
Health insurers led the market lower on concerns about upcoming profits after the U.S. government announced lower-than-expected rates for Medicare Advantage plans. Humana fell 13.4%. Meanwhile, Tesla fell 4.9% after delivering fewer cars than analysts expected in early 2024.
Traders have significantly reduced the Fed's expectations for the number of rate cuts this year, from the beginning of the year forecast six rate cuts reduced by half. This would be in line with the three rate cuts implied by Fed officials themselves.
As the U.S. economy remains stronger than expected, investors say the likelihood that the Federal Reserve may cut interest rates only twice this year is rising. Gargi Chadhuri, a carpet strategist in BlackRock's Americas Premier Investment and Investment Group, advised investors to spread their bets across a variety of investments rather than "trying to take advantage of the market or the Fed".
In the bond market, the 10-year Treasury yield rose to 4.35% from 4.33% late Monday.
The two-year Treasury yield slipped to 4.69% from 4.71% at the end of Monday's rocky day, with the two-year yield moving more closely in line with expectations for Fed action.
High interest rates make borrowing more expensive, thereby intentionally slowing down economic development. At the same time, high interest rates hurt investment prices, making investors more willing to put their money into safer alternatives. Bitcoin fell 5.4%.
In addition to concerns about high interest rates, critics argue that the U.S. stock market has become too expensive after surging above 20% in six months. Companies may need to realize strong profit growth to justify such volatility.
On the energy trading side, US crude oil rose by 3 cents to US$85.18 per barrel. The international standard Brent crude oil rose by 10 cents to US$89.02 per barrel.
In currency trading, the U.S. dollar rose to 151.61 yen from 151.54 yen. The euro was trading at USD 1.0775, higher than USD 1.0776.
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By Stan Choe, AP Business Writer.
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