Asian shares fell slightly on Monday, reflecting investor sentiment over weakness on Wall Street, as the squeeze from central banks around the world to curb inflation.
The benchmark for Japan, Nikkei 225 NIK, dropped 2% in morning trading. Australia's S&P ASX 200 XJO, dipped 1.6%, and South Korea's Kospi 180721, dropped 2.4%. Hong Kong's Hang Seng HSI was about flat, as was the Shanghai Composite SHCOMP, Benchmark indexes in Singapore STI, Taiwan Y 9999 and Indonesia JAKIDX.
A market strategist at IG in Singapore, Yeap Jun Rong, said in a report that the strength in the U.S. dollar weighed on Asian indices, and may lead to further sell-off on Wall Street to end last week.
The recent moves by the U.S. Federal Reserve and other central banks around the world to raise interest rates are intended to curb high inflation, but they also threaten a recession if the rates rise too much or too quickly.
Wall Street ended the week with widespread selling, leaving major indexes with their fifth loss in six weeks. Data on European business activity was discouraging, and a separate report suggested that the U.S. activity is still not quite as bad as in earlier months.
The S&P 500 SPX fell by 1.7% to 3,693 on Friday. It dropped for the fourth time in a row. The Dow DJIA, which was down more than 800 points at one point, lost 486.27 points, or 1.6%, to close at 29,590. The Nasdaq COMP fell 1.8% to 10,867. More than 85% of the S&P 500 stock prices closed in the red, with technology companies, retailers and banks among the biggest weights on the benchmark index.
The Fed lifted its benchmark rate, which affects consumer and business loans, to a range of 3% to 3.25% last week. It was close to zero at the beginning of the year. The Fed released a forecast that it could be up to 4.4% by the end of the year, a full point higher than envisioned in June.
In the electronic trading on the New York Mercantile Exchange, the benchmark U.S. crude CLX 22 rose 12 cents to $78.86 a barrel. U.S. crude oil prices fell 5.7% Friday to their lowest level since early this year due to worries that a weaker global economy will burn less fuel.
Brent crude BRNX 22, the international standard, was up 6 cents to $86.21 a barrel.
The recent rise in the US dollar has sparked concerns about the loss of profits for U.S. companies with overseas business, and has put a financial squeeze on much of the developing world.
When the dollar approached 146 yen last week, the Bank of Japan intervened. Since then, the dollar has been trading at 143 yen.
It was up Monday to 143.75 Japanese yen from 143.32 yen.