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Asian shares fall on Fed worries after Wall Street sell-off

TOKYO — Asian shares were trading lower Tuesday, echoing an easy sell-off on Wall Street amid speculation about another interest raise from the U.S. Federal Reserve.

Benchmarks in Asia slid over the region in morning trading, including Japan, China, South Korea and Australia. The most recent market slide comes as investors grapple with uncertainty over once the highest inflation in decades will ease significantly, just how much the Fed will need to raise interest levels to get it in order and just how much the rate hikes will slow the economy.

Investors will undoubtedly be searching for insight into these unknowns later this week, once the Federal Reserve holds its annual meeting in Jackson Hole, Wyoming.

The downbeat mood in Wall Street is playing out in the Asia session aswell, and even though another round of rate cuts to benchmark lending rate in China yesterday may aid to cushion some losses, overall upside could still remain limited amid the shunning of risks, said Yeap Jun Rong, market strategist at IG in Singapore.

The Peoples Bank of China cut a lending rate Monday, weekly after it cut interest levels.

Japan’s benchmark Nikkei 225 lost 1.3% in morning trading to 28,413.04. Australia’s S&P/ASX 200 slid 0.5% to 7,009.30. South Korea’s Kospi dipped nearly 1.0% to 2,438.19. Hong Kong’s Hang Seng shed 0.7% to 19,520.36, as the Shanghai Composite fell 0.3% to 3,267.19.

Investors are increasingly being cautious as continuous risk-off flows have hit global markets, said Anderson Alves at ActivTrades, noting that rising gas prices were a large risk, specifically for Europe.

The S&P 500 had its biggest slide since mid-June, sliding 2.1%, nearly doubling its losses from the other day, when it broke a four-week winning streak. The Dow Jones Industrial Average slumped 1.9% and the Nasdaq dropped 2.5%.

Technology companies and retailers had a few of the heaviest losses Monday. Smaller company stocks also lost ground, pulling the Russell 2000 index 2.1% lower.

Bond yields gained ground. The yield on the 10-year Treasury, which influences rates on home mortgages along with other loans, rose to 3.03% from 2.97% late Friday.

The broader market’s losses seriously the heels of a weekslong rally. Investors want to figure out where in fact the economy goes from here as stubbornly hot inflation hurts businesses and consumers. Record-high inflation also offers investors concentrating on central banks and their efforts to fight high prices without further damaging economic growth.

Youve had a significant rally and theres reason never to be certain where were going from here, said Tom Martin, senior portfolio manager with Globalt Investments. There’s still decent prospect of a recession.

Minutes the other day from the Federal Reserve’s July board meeting affirmed plans for more rate hikes despite signs of weaker economic activity. Traders worry aggressive steps to slow the economy might go too much and bring about a recession.

Fed Chair Jerome Powell is scheduled to provide a speech on Friday morning at the central bank’s annual meeting in Jackson Hole, which starts Thursday. The Fed is holding its meeting carrying out a heavy week of company and economic data that showed inflation continues to be squeezing the economy, but consumer spending remains resilient.

I dont think we’re from the woods yet on inflation, Martin said. We still dont really understand how inflation will probably pan out and what the Fed can do.

In energy trading, benchmark U.S. crude lost 54 cents to $90.23 a barrel. Brent crude, the international standard, added 77 cents to $97.25 a barrel.

In forex trading, the U.S. dollar fell to 137.14 Japanese yen from 137.49 yen. The euro was little changed at 99 cents.

AP Business Writers Damian J. Troise and Alex Veiga contributed.

Yuri Kageyama is on Twitter at

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