Stocks closed lower in Asia on Thursday as concerns over the US economy and a possible US government debt default weighed on Wall Street.
Japan’s benchmark Nikkei 225 rose 0.4% to 30,801.13 points, extending recent gains as investors bet on higher returns for Japanese companies.
Hong Kong’s Hang Seng fell 2% to 18,739.03 as investors worried about the path of China’s economic recovery after the government relaxed pandemic restrictions late last year. The Shanghai Composite Index also fell, by 0.5% to 3,188.34.
boiling tensions between China and the United States over technology and security increased uncertainties.
In Seoul, the Kospi fell 0.5% to 2,554.69, while Australia’s S&P/ASX 200 shed 1.1% to 7,138.20. India’s Sensex fell 0.2%.
Taiwanese benchmark Taiex jumped 0.8% on gains for major computer chip makers. Taiwan Semiconductor Manufacturing Co., the world’s biggest, rose 3.4%.
On Wednesday, the S&P 500 lost 0.7% after House Speaker Kevin McCarthy said Republicans and Democrats remain far apart in talks on raising the debt ceiling to avoid a potentially disastrous default. on US government debt.
The main U.S. stock index is on track for its worst week in more than two months as the once unthinkable creeps closer to possibility. Minutes from the last Federal Reserve meeting showed that policymakers are divided on whether to continue raising interest rates.
The US government could run out of money to pay its bills as early as June 1 unless Congress allows it to borrow more. The widespread belief on Wall Street is that Congress will reach a deal at 11 am, as has been done several times before, because a default would benefit no one and could cause massive disruption to the economy and financial markets.
“As the early-June deadline approaches, only a concrete resolution can provide much-needed conviction for markets in lieu of verbal reassurances, with lingering risks of an ongoing stalemate still keeping sentiment on a cautious note,” IG’s Yeap Jun Rong said in a comment.
In all, the S&P 500 dropped 30.34 to 4,115.24. The Dow Jones Industrial Average fell 0.8% to 32,799.92, while the Nasdaq composite lost 0.6% to 12,484.16.
Equity market remained resilient despite concerns. So far, the fear has focused on the bond market, where prices have dropped for Treasury bills due to payment close to a possible default date.
The 10-year Treasury yield rose to 3.73% from 3.70% on Tuesday. Helps set rates for mortgages and other major loans. The two-year Treasury yield, which moves the most on expectations for Fed action, rose to 4.37% from 4.33%.
Interest rates are so high because the Federal Reserve pulled them up at the fastest pace in decades to try to control inflation.
Traders are hopeful that just one more rally is on the way this summer, if any. Federal Reserve officials were divided earlier this month about whether to pause its rate hikes at its next meeting in June, according to the minutes. of your last meeting.
Helping to limit Wall Street’s losses, several companies reported stronger earnings earlier in the year than analysts expected.
kohl’s jumped 7.5% after reporting a surprising profit in the last quarter, helped in part by momentum from its Sephora salons. Analysts expected it to be a loss.
Resilient US consumer spending has helped stave off a recession, even as manufacturing and other areas struggle with higher interest rates. Homebuilder Toll Brothers rose 2.1% after reporting much better-than-analysts-expected results for the latest quarter.
In other trading on Thursday, benchmark US crude fell 38 cents to $73.96 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.43 on Wednesday to settle at $74.34 a barrel.
Brent crude, the standard for international trade, fell 28 cents to $77.95 a barrel.
The US Dollar rose to 139.56 Japanese Yen from 139.41 Yen. The euro dropped to $1.0740 from $1.0754.