Asian stocks plunge after Wall Street selloff on inflation, COVID | Financial markets

Asian stocks slid on Thursday, following a sharp sell-off on Wall Street, as investors worried about global inflation, China’s zero-COVID policy and war in Ukraine, while the safe-haven dollar faltered. is relaxed.

European stock markets also looked set for another tough day. Pan-regional Euro Stoxx 50 futures fell 0.52%, German DAX futures FDXc1 fell 0.63% while FTSE FFIc1 futures fell 0.51%.

Nasdaq futures fell 0.15%, although S&P500 ESc1 futures reversed earlier losses to be 0.05% higher.

Overnight on Wall Street, retail giant Target Corp warned of a bigger margin hit due to rising costs as it reported its quarterly profit had halved. Its shares plunged 24.88%. The Nasdaq fell almost 5% while the S&P 500 lost 4%.

“Tuesday’s rebound turned out to be ‘too bullish’, so the self-doubt resulting from the misjudgment only causes traders to hit the sell button even harder,” said Hebe Chen, market analyst at IG.

MSCI’s broadest index of Asia-Pacific stocks outside Japan posted four days of gains and fell 1.8%, led by a 1.5% loss for the resource-rich Australian index, a 2.1% decline in Hong Kong stocks and a 0.3% decline in mainland China. blue fries.

The Japanese Nikkei lost 1.7%.

Hong Kong-listed tech giants were particularly hard hit, with the index falling more than 3%. Tencent fell more than 6% after posting no revenue growth in the first quarter, its worst performance since its IPO in 2004.

China’s tech sector is still reeling from a year-long government crackdown and a slowing economic outlook resulting from Beijing’s strict zero COVID policy, even as Vice Premier Liu He’s soothing comments to leaders of technology had boosted sentiment on Wednesday.

Two US central bankers say they expect the Federal Reserve to downgrade to a more measured pace of policy tightening after July as it seeks to stifle inflation without raising borrowing costs so high that they plunge the economy into recession.

“Worry about inflation”

“It must be said that the worry about inflation has never gone away since we entered 2022. However, although things have not reached the point of no return, they seem to be going in the direction of ‘out of control.’ This is probably the most worrying part for the market,” IG’s Chen said.

The U.S. dollar, which had rallied on lower risk appetite, eased 0.15% against a basket of major currencies, following a 0.55% jump overnight that ended a three-day losing streak.

The Aussie gained 0.8% as an easing of the COVID lockdown in Shanghai helped sentiment.

Data on Wednesday showed UK inflation hit its highest annual rate since 1982 as energy bills soared, while Canadian inflation hit 6.8% last month, mostly due to rising food and housing prices.

Bilal Hafeez, CEO of London-based research firm MacroHive, said there was currently a strong preference for safe-haven assets, especially cash.

“There may be short-term rallies in equities like the past few days, but overall the era of low yields is over and we are moving into a higher rate environment,” Hafeez told Reuters Global. Market Forum.
“This will put pressure on all markets that have benefited from low returns, especially equities.”

US Treasuries rallied overnight and remained largely flat in Asia, leaving the benchmark 10-year Treasury yield at 2.9076%.
The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 2.6800% from a US close of 2.667%.

Oil prices rallied after early losses as lingering fears of a tight global supply outweigh fears of slowing economic growth.

Brent crude rose 1.2% to $110.41 a barrel, while U.S. CLc1 crude rose 0.8% to $110.48 a barrel.

Gold was slightly lower. Spot gold was trading at $1,814.88 an ounce.