Fed Interest Rate Outlook Drag Asian Markets

Asian stock markets are mostly lower on Wednesday, extending the losses in the previous session and following the broadly negative cues overnight from Wall Street, with investors pressing sales at several counters amid concerns about inflation and imminent monetary tightening by the Federal Reserve, and on reports about imposition of new sanctions by Western nations on Russia. Asian Markets closed mostly lower on Tuesday.

Citing Russian atrocities in Ukraine, the White House announced a ban on new investment in Russia, severe financial sanctions on Russia’s largest bank and sanctions on Russian elites and their family members, including President Vladimir Putin’s adult children.

The Fed released the minutes of its March meeting, which showed that the meeting featured a continued discussion about reducing the size of the central bank’s balance sheet. The Fed also announced its widely expected decision to raise interest by 25 basis points to a range of 0.25 to 0.50 percent, marking the first rate hike since December 2018.

The minutes showed many participants would have preferred a 50 basis point increase due to rate of inflation being well above the Fed’s objective and facing risks to the upside. However, a number of these participants felt a 25 basis point increase would be appropriate in light of the greater near-term uncertainty associated with Russia’s invasion of Ukraine.

The Australian stock market is modestly lower on Wednesday, extending the losses in the previous session, with the benchmark S&P/ASX 200 below the 7,500 level, following the broadly negative cues overnight from Wall Street, with materials, energy and technology stocks continuing to drag the market amid concerns about inflation and imminent monetary tightening by the Federal Reserve.

The benchmark S&P/ASX 200 Index is losing 34.50 points or 0.46 percent to 7,455.60, after hitting a low of 7,439.30 earlier. The broader All Ordinaries Index is down 38.10 points or 0.49 percent to 7,750.20. Australian stocks ended modestly lower on Tuesday.

Among major miners, OZ Minerals is losing more than 1 percent and BHP Group is edging down 0.2 percent, while Fortescue Metals is edging up 0.4 percent. Mineral Resources and Rio Tinto are flat.

Oil stocks are weak. Origin Energy is losing more than 1 percent and Santos is edging down 0.5 percent, while Beach energy and Woodside Petroleum are down almost 1 percent each.

In the tech space, WiseTech Global is losing almost 4 percent, Block is slipping more than 4 percent, Appen is down 1.5 percent, Zip is declining more than 2 percent and Xero is sliding almost 3 percent.

Among the big four banks, Commonwealth Bank is edging down 0.4 percent and ANZ Banking is down more than 1 percent, while Westpac and National Australia Bank are losing almost 1 percent each.

Among gold miners, Newcrest Mining, Evolution Mining and Northern Star Resources are gaining almost 1 percent each, while Resolute Mining is adding more than 2 percent. Gold Road Resources is flat.

In the currency market, the Aussie dollar is trading at $0.748 on Wednesday.

The Japanese stock market is sharply lower on Wednesday, extending the sharp losses in the previous session, with the Nikkei 225 falling over 500 points to stay above the 26,800 level, following the broadly negative cues overnight from Wall Street, amid concerns about the economic impact of the weaker yen combined with the effects of the ongoing Russia-Ukraine conflict and the imminent aggressive monetary policy tightening by the US Federal Reserve.

The benchmark Nikkei 225 Index closed the morning session at 26,803.34, down 546.96 points or 2.00 percent, after hitting a low of 26,801.79 earlier. Japanese stocks closed sharply lower on Tuesday.

Market heavyweight SoftBank Group is losing more than 2 percent and Uniqlo operator Fast Retailing is declining almost 3 percent. Among automakers, Honda is declining more than 5 percent and Toyota is losing more than 1 percent.

In the tech space, Screen Holdings is losing almost 4 percent, Advantest is declining almost 5 percent and Tokyo Electron is down more than 4 percent.

In the banking sector, Mizuho Financial is losing more than 1 percent, Mitsubishi UFJ Financial is down more than 2 percent and Sumitomo Mitsui Financial is declining almost 1 percent.

Among the major exporters, Mitsubishi Electric and Sony are losing almost 3 percent each, while Canon is declining almost 1 percent and Panasonic is down more than 3 percent.

Among the other major losers, Nippon Express is losing more than 5 percent, while Hitachi is down almost 5 percent. Nippon Sheet Glass, Hino Motors and Fuji Electric are declining more than 4 percent each, while Japan Steel Works, Toho Zinc, Sojitz and Sumitomo Metal Mining are slipping almost 4 percent each. Subaru and Taiyo Yuden are declining more than 3 percent each.

Conversely, Astellas Pharma is gaining more than 4 percent.

In the currency market, the U.S. dollar is trading in the higher 123 yen-range on Wednesday.

Elsewhere in Asia, South Korea is plunging 1.3 percent, while New Zealand, China, Hong Kong, Singapore, Malaysia and Taiwan are lower by between 0.1 and 0.8 percent each. Indonesia is bucking the trend and is up 0.4 percent.

On Wall Street, stocks moved mostly lower during trading on Wednesday, extending the significant downward move seen in the previous session. The major averages all moved to the downside, with the tech-heavy Nasdaq showing another particularly steep drop.

After tumbling by 2.3 percent during trading on Tuesday, the Nasdaq plunged 315.35 points or 2.2 percent to 13,888.82. The S&P 500 also slumped 43.97 points or 1 percent to 4,481.15, while the narrower Dow posted a more modest loss, falling 144.67 points or 0.4 percent to 34,496.51.

The major European markets also closed sharply lower on the day. Germany’s DAX tumbled 1.89 percent, France’s CAC 40 plunged 2.21 percent and the U.K.’s FTSE 100 ended down 0.34 percent.

Crude oil prices fell sharply on Wednesday, pushing the most active crude futures contracts to their lowest close in about three weeks, after data showed a larger than expected increase in crude inventories last week. West Texas Intermediate Crude oil futures for May ended down by $5.73 or about 5.6% at $96.23 a barrel.

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