BEIJING (AP) — Asian stock markets fell again Monday as investors grappled with fears that the Federal Reserve and European central banks might be ready to trigger a recession to crush inflation.
Shanghai, Tokyo, Hong Kong and Sydney fell. Oil prices rose nearly $1 a barrel, but benchmark US crude remained below $80.
Wall Street fell Friday after the Fed raised its forecast on how long interest rates must remain high to cool inflation that has been high for nearly four decades. The European Central Bank warned of more rate hikes.
That “hawkish rhetoric” points to “increasing pipeline risks of a global recession,” Mizuho Bank’s Tan Boon Heng said in a report.
The Shanghai Composite Index fell 1.3% to 3,127.78, despite China’s ruling Communist Party announcing Friday that it will try to reverse an economic slump by boosting domestic consumption and the real estate market.
The Nikkei 225 in Tokyo fell 1.1% to 27,218.28 and the Hang Seng in Hong Kong lost 0.7% to 19,316.58.
The Seoul Kospi fell 0.4% to 2,350.27 and Sydney’s S&P-ASX 200 fell 0.2% to 7,137.00. Singapore advanced, while New Zealand and other Southeast Asian markets declined.
Wall Street’s benchmark S&P 500 index posted its second weekly drop after losing 1.1% to 3,852.36 on Friday for its third daily drop. It’s down about 19% so far this year.
The Dow Jones Industrial Average fell 0.8% to 32,920.46. The Nasdaq index lost 1% to 10,705.41 points.
More than 80% of the stocks in the benchmark S&P 500 fell. Technology and healthcare stocks were among the largest weights in the market. Microsoft was down 1.7% and Pfizer was down 4.1%.
Inflation in the US fell to 7.1% in November from a year earlier, from a June high of 9.1%, but is still painfully high.
The Fed raised short-term benchmark interest rates by half a percentage point for the seventh time this year on Wednesday. That dashed hopes that the US Federal Reserve would scale back hikes on signs that inflation and economic activity were cooling.
The federal funds rate is at a 15-year high of 4.25% to 4.5%. The Fed forecasts this will reach a range of 5% to 5.25% by the end of 2023. The forecast does not call for a rate cut before 2024.
In the energy markets, US benchmark crude rose 94 cents to $75.23 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.82 on Friday to $74.29. Brent crude, the price base for international oil trading, gained $1.01 to $80.05 a barrel in London. It lost $2.17 the previous session to $79.04.
The dollar fell from 136.56 yen on Friday to 136.25 yen. The euro rose from $1.0600 to $1.0609.