Stock market today: Asian stocks are lower as central bank interest rates continue to rise

Bangkok (AFP) – Asian stocks fell sharply on Friday after several central banks around the world raised interest rates in their battle against inflation.

Hong Kong and Tokyo fell about 2% and most other regional markets fell. US futures and oil prices also fell.

Japan announced that its inflation rate was higher than expected, adding to the central bank’s expectations May adjust its policies to reflect upward price pressuresThis led to a sharp rise in the value of the dollar against the yen. The Bank of Japan has kept its benchmark interest rate at minus 0.1% for a decade as policymakers maintain cheap credit to encourage more investment and spending.

The government reported that the core inflation rate, excluding volatile energy and food prices, was 3.2% in May, above the official target of 2%.

“We think there are signs of increasing supply-side inflationary pressures, but they are certainly not strong enough for the Bank of Japan to trigger immediate tightening,” ING Economics said in a commentary.

The dollar traded at 143.11 yen, up from 143.10 yen, near the highest level since November. A weaker Japanese yen increases costs for Japanese businesses and consumers given the country’s heavy dependence on imports.

Tokyo’s Nikkei 225 fell 1.8% to 32,654.37 by midday, and Hong Kong’s Hang Seng fell 1.9% to 18,845.04.

In Seoul, the Kospi Index fell 0.8% to 2572.33, while Australia’s S&P/ASX 200 fell 1.2% to 7110.40. Markets in mainland China were closed for a holiday. Stocks also fell in Mumbai and Bangkok.

On Thursday, the S&P 500 rose 0.4% to 4,381.89, although the majority of stocks were down. The rebound in technology stocks helped offset losses elsewhere in the market and kept the benchmark steady.

Gains in high-growth stocks also pushed the Nasdaq Composite Index to a market-leading gain of 1%, to 13,630.61. The Dow Jones Industrial Average fell less than 0.1%, to 33,946.71.

The Bank of England raised the main interest rate by a larger margin than expected for a 15-year high. Central banks in NorwaySwitzerland and Turkey It also raised borrowing rates.

Stock indices fell in Europe after the recent interest rate hikes. Britain’s FTSE 100 fell 0.8%. The recent increase in interest rates from the Bank of England marked its 13th consecutive hike in its efforts to combat stubbornly high inflation..

Meanwhile, the Chairman of the US Federal Reserve, Jerome Powell, reiterated his belief that inflation remains too high. and that further increases in rates may be necessary. Powell testified before a Senate committee on Thursday, a day after he appeared before a House committee.

The Fed held interest rates steady at its latest meeting after aggressively raising rates throughout 2022 and into 2023 to tame painfully high inflation. Inflation has subsided somewhat since last summer, but the Fed has indicated it may raise interest rates twice more this year as it tries to push inflation down to its stated target of 2%.

Central banks around the world were raising interest rates to make borrowing more expensive and slow economic growth to stifle inflation. But the strategy risks going too far in disrupting growth and dragging economies into recession.

In Asia, central banks have begun to keep interest rates stable, or in the case of VietnamCut it off, as their economies have slowed.

High interest rates have already slowed manufacturing and other parts of the US economy. They also helped cause three high-profile failures in the American banking system. The banking industry remains under pressureeven after the federal government acted quickly to provide support.

The Labor Department reported Thursday that the number of Americans filing for unemployment benefits remained high last weekwhich is a potential sign that the Fed’s rate hikes are beginning to cool the surprisingly flexible labor market.

In the housing industry, sales of previously occupied homes boosted last month To top economists’ predictions for a slip.

In other trading on Friday, the price of US crude oil fell 96 cents to $68.55 a barrel in electronic trading on the New York Mercantile Exchange. It shed $3.02 to $69.51 on Thursday.

Brent crude, the international benchmark, lost 96 cents to $73.39 a barrel.

The euro was trading at $1.0933, down from $1.0960.

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Damien J. Trois, business writer for AP Business, contributed.