Indices in China, Japan, South Korea and Australia tumbled as investors weighed the prospect of a global recession.
Asian shares fell after a mixed performance on Wall Street as markets jittered over the prospect of a possible recession.
Tokyo’s Nikkei 225 fell 2.2 percent to 25,984.51 on Wednesday, while the Kospi fell 2.8 percent to 2,161.86. In Sydney, the S&P/ASX 200 was down 0.8% at 6,443.30.
Hong Kong’s Hang Seng lost 2.1 percent to 17,483.89 and the Shanghai Composite dropped 0.8 percent to 3,068.59. Taiwan’s benchmark index fell 2.1 percent.
The week started with a broad sell-off, with the Dow Jones Industrial Average entering a bear market — or more than 20% below its January peak — joining other major U.S. indexes.
On Tuesday, the S&P 500 fell 0.2% to 3,647.29, its sixth straight decline. The Dow fell 0.4% to 29,134.99, while the Nasdaq Composite closed 0.2% higher at 10,829.50.
Small company stocks outperformed the broader market. The Russell 2000 rose 0.4 percent to end at 1,662.51.
The major stock indexes remain in a prolonged slump. With just a few days left in September, stocks are set for another month of decline on concerns that higher interest rates to fight inflation could tip the economy into recession.
The S&P 500 fell about 8% in September and has been in a bear market since June, when the index fell more than 20% from its all-time high reached on Jan. 4. Monday’s drop in the Dow put it at the same company as the benchmark index and the tech-heavy Nasdaq.
interest rates rise
Central banks around the world have been raising interest rates to raise borrowing costs and cool the hottest inflation in decades. The Fed has been particularly aggressive And last week raised the benchmark interest rate again, affecting many consumer and business loans. It is now in the 3-3.25% range. Almost zero at the beginning of the year.
The Fed also issued a forecast suggesting its benchmark rate could be at 4.4% by year-end, a full percentage point higher than its June forecast.
Wall Street worries that the Fed will over-slam the brakes on an already slowing economy and tip it into recession. Higher interest rates have been weighing on stocks, especially pricier tech companies, which tend to be less attractive to investors as interest rates rise.
Energy stocks rose as U.S. oil prices rose 2.3%. Exxon Mobil rose 2.1%.
Bond yields were mostly higher on Tuesday. The 2-year U.S. Treasury yield, which tends to track expectations of Fed action, fell to 4.31% from 4.34% late Monday. It is trading at its highest level since 2007. The yield on the 10-year Treasury note, which affects mortgage rates, rose to 3.98% from 3.93%.
Investors will be closely watching the next round of corporate earnings to better understand how companies are responding to inflation. The company will begin reporting its latest quarterly results in early October.
Consumer confidence remained strong despite rising prices for everything from food to clothing. The Conference Board’s latest consumer confidence report for September showed confidence was stronger than economists had expected.
The government will release its weekly report on unemployment benefits on Thursday, as well as an update on second-quarter gross domestic product. On Friday, the government is to release another report on personal income and spending, which will help provide more detail on where and how inflation is hurting consumer spending.