BEIJING (TBEN) — Asian stocks fell for the third day on Friday after more rate hikes by the Federal Reserve and other central banks to contain ongoing inflation, fueling fears of a possible global recession.
Shanghai, Hong Kong, Seoul and Sydney fell. The oil price fell. The Japanese markets were closed for a holiday.
Wall Street’s benchmark S&P 500 index fell for a third day on Thursday after rate hikes by central banks in Britain, Switzerland, Turkey and the Philippines. The Fed raised its key rate for the fifth time this year on Wednesday, signaling more hikes to come.
“Global equities are struggling as the world expects rising interest rates to trigger a much faster and potentially severe global recession,” Oanda’s Edward Moya said in a report.
The Shanghai Composite Index lost less than 0.1% to 3,107.88 and the Hang Seng in Hong Kong fell 0.4% to 18,064.67. The Kospi in Seoul fell 1.8% to 2,290.54 points.
The S&P-ASX 200 in Sydney fell 2% to 6,567.30 and the Sensex in India opened 1.1% lower at 58,467.75. New Zealand and Southeast Asian markets declined.
The S&P 500 lost 0.8% to 3,757.99 on Thursday. The Dow Jones Industrial Average fell 0.4% to 30,076.68 and the Nasdaq composite fell 1.4% to 11,066.81.
Also on Friday, the central bank of Vietnam raised the main lending rate by as much as 1 percentage point, surprising forecasters. The State Bank of Vietnam appeared to be trying to cool inflation while discouraging capital outflows in search of higher interest rates abroad.
Investors fear that the Fed and other central banks are willing to tolerate a painful slump in economic activity to bring prices under control.
Some point to signs that the US economy is cooling in support for the Fed to call off plans for more rate hikes. But Chairman Jerome Powell said on Wednesday that the Fed will keep interest rates elevated for longer if necessary to bring inflation back to its 2% target.
US consumer inflation fell to 8.3% in August from 9.1% the previous month’s peak. But core inflation, which excludes volatile food and energy prices to provide a clearer picture of the trend, rose to 0.6% in the preceding month, up from the 0.3% increase in the previous month. July. That indicated that the pressure to increase prices was still strong.
The Fed on Wednesday raised its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%. It released a forecast showing that it expects the benchmark rate to be 4.4% by the end of the year, a full point higher than projected in June.
Traders are also looking ahead to the quarterly financial results of major companies.
In the energy markets, the US benchmark crude oil lost 25 cents to $83.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 55 cents to $83.49 on Thursday. Brent oil, used to price international oils, fell 28 cents to $89.25 a barrel in London. It rose 63 cents the previous session to $90.46.
The dollar fell to 142.18 yen from 142.49 yen on Thursday. The euro fell from 98.31 cents to 98.23 cents.