Indices in China, Japan, South Korea and Australia slump as investors weigh the prospect of a possible global recession.
Asian stocks tumbled after mixed results on Wall Street as markets vacillated over the prospect of a possible recession.
Tokyo’s Nikkei 225 index fell 2.2 percent to 25,984.51 on Wednesday, while Seoul’s Kospi slipped 2.8 percent to 2,161.86. In Sydney, the S&P/ASX 200 fell 0.8 percent to 6,443.30.
Hong Kong’s Hang Seng fell 2.1 percent to 17,483.89 and the Shanghai Composite Index fell 0.8 percent to 3,068.59. Taiwan’s benchmark fell 2.1 percent.
The week began with a broad sell-off that sent the Dow Jones Industrial Average into a bear market — or more than 20 percent below its January high — and joined other major US indices.
On Tuesday, the S&P 500 slipped 0.2 percent to 3,647.29, its sixth consecutive loss. The Dow fell 0.4 percent to 29,134.99, while the Nasdaq Composite closed up 0.2 percent to 10,829.50.
Small company stocks fared better than the broader market. The Russell 2000 gained 0.4 percent to close at 1,662.51.
Major indices remain in an extended slump. With just a few days left in September, stocks are poised for another month of losses as markets fear higher interest rates to fight inflation could plunge the economy into recession.
The S&P 500 fell about 8 percent in September and has been in a bear market since June, when it fell more than 20 percent from its Jan. 4 all-time high. The Dow’s decline on Monday put it in the same company as the benchmark index and the tech-heavy Nasdaq.
Rising interest rates
Central banks around the world have been raising interest rates to make borrowing more expensive and cool the hottest inflation in decades. The Federal Reserve has been particularly aggressive, raising interest rates again last week, which affects much consumer and corporate credit. It is now in a range of 3-3.25 percent. It was practically zero at the beginning of the year.
The Fed has also issued a forecast suggesting its interest rate could be 4.4 percent by the end of the year, a full percentage point higher than it had projected in June.
Wall Street fears the Fed will slam on the brakes too hard on an already flagging economy, pushing it into a recession. Higher interest rates have weighed on stocks, particularly pricier tech companies, which tend to look less attractive to investors when interest rates rise.
Energy stocks gained ground as US oil prices surged 2.3 percent. Exxon Mobil rose 2.1 percent.
Bond yields were mostly higher on Tuesday. The 2-year Treasury yield, which is trending in line with expectations for Federal Reserve action, fell to 4.31 percent from 4.34 percent late Monday. It is trading at its highest level since 2007. The 10-year Treasury yield, which drives mortgage rates, rose to 3.98 percent from 3.93 percent.
Investors will be watching the next round of corporate earnings closely to get a better sense of how companies are handling inflation. The companies will start releasing their latest quarterly results in early October.
Consumer confidence remains strong despite higher prices for everything from groceries to clothing. The Conference Board’s latest September consumer confidence report showed that confidence was stronger than economists had been expecting.
The government is due to release its weekly unemployment benefits report on Thursday, along with an updated second-quarter gross domestic product report. On Friday, the government will release another personal income and spending report, which will help provide more detail on where and how inflation is affecting consumer spending.