Asian stocks follow Wall Street ahead of a possible US rate hike

Beijing (AFP) – Asian stock markets followed Wall Street lower on Wednesday as traders braced for the possibility of a sharp interest rate hike from the Federal Reserve to cool inflation.

Shanghai, Hong Kong and South Korea declined. Tokyo advanced. Oil prices were little changed, staying below $100 a barrel.

Wall Street fell on Tuesday after Walmart warned that inflation, which has surged to a four-decade high of 9.1%, is hurting US consumer spending.

On Wednesday, the Federal Reserve is expected to announce a rate hike of up to three-quarters of a percentage point, three times its usual margin. That would match a similar increase last month, the US central bank’s largest increase in 28 years.

Investors are concerned that aggressive anti-inflationary measures by the Federal Reserve and central banks in Europe and Asia could derail global economic growth.

“The main risk at this point is actually ‘hyper-inflation’ with monetary policy tightening too abruptly, causing the unemployment rate to rise unnecessarily,” Thomas Kosterge of Pictet Wealth Management said in a report. Thomas said that most economic indicators and lower commodity prices are already pointing to slower inflation ahead.

The Shanghai Composite lost 0.1% to 3,273.32 while Tokyo’s Nikkei 225 rose 0.1% to 27,692.89. Hong Kong’s Hang Seng fell 1.5% to 20,598.58.

Seoul’s Kospi shed 0.6% to 2,398.48 and Sydney’s S&P-ASX 200 shed 0.1% to 6,798.20.

New Zealand advanced while Southeast Asian markets fell.

On Wall Street, the S&P 500 fell 1.2% to 3,921.05. The Dow Jones Industrial Average fell 0.7% to 3,1761.54. The Nasdaq Composite closed 1.9% lower at 11,562.57.

Walmart stock fell 7.6% after the retail giant cut its second-quarter and full-year earnings forecasts late Tuesday. She said rising food and gasoline prices are forcing shoppers to cut back on more profitable discretionary goods, especially clothing.

Retailer Profit Warning The middle of this quarter is rare and has raised concerns about how the highest rate of inflation in 40 years will affect the entire retail sector.

Other major chains also fell. The target is down 3.6%, Macy’s stock is down 7.2% and Kohl’s is down 9.1%.

Technology stocks fell. Microsoft shares fell 2.7 percent, Amazon 5.2 percent, and Facebook’s Meta platform fell 4.5 percent.

General Motors down 3.4% after second-quarter profit fell 40% from a year ago. US sales fell 15% after a shortage of processor chips and other components left the company unable to deliver 95,000 vehicles during the quarter.

In energy markets, benchmark US crude rose 30 cents to $95.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.72 on Tuesday to $94.98. Brent crude, the price basis for global oils, added 5 cents to $99.51 a barrel in London.

The dollar rose to 136.97 yen from 136.00 yen on Tuesday. The euro rose to $1.0145 from $1.0120.