Asian stocks follow Wall St down as rate hike worries grow

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Beijing, May6 (BNA): Asian stocks followed Wall Street lower Friday as fears spread that U.S. interest rate hikes to fight inflation might stall economic growth.

Shanghai, Hong Kong, Seoul and Sydney declined. Tokyo edged higher as trading resumed after a holiday, reports AP.

Wall Street’s benchmark S&P 500 index plunged 3.6% on Thursday for its biggest one-day loss in two years as optimism that drove the previous day’s rally evaporated.

Investors worry about whether the Federal Reserve, which raised its key interest rate by a half percentage point on Wednesday, can cool inflation without tipping the slowing U.S. economy into recession.

Traders were temporarily encouraged by chairman Jerome Powell’s comment that the Fed wasn’t considering even bigger increases.

The Kospi in Seoul tumbled 1.3% to 2,642.26 and Sydney’s S&P-ASX 200 lurched down 2.3% to 7,197.40. New Zealand and Singapore also declined.

Also Thursday, the Bank of England raised its benchmark rate to the highest level in 13 years, its fourth hike since December to cool British inflation that is running at 30-year highs.

The S&P 500 fell 3.6% to 4,146.87, giving back Wednesday’s 3% increase.

The Dow Jones Industrial Average lost 3.1% to 32,997.97. The Nasdaq, dominated by tech stocks, slumped 5% to 12,317.69.

The U.S. government was due to report employment numbers on Thursday, a closely watched data point.

Economists at BNP Paribas still expect the Fed to keep hiking the federal funds rate until it reaches a range of 3% to 3.25%, up from zero to 0.25% earlier this year.

Benchmark U.S. crude gained 77 cents to $109.03 in electronic trading on the New York Mercantile Exchange. The contract rose 45 cents to $108.26 on Thursday. Brent crude, the price basis for international oil trading, advanced 75 cents to $111.65 per barrel in London.

The dollar rose to 130.47 yen from Thursday’s 130.40 yen. The euro gained to $1.0539 from $1.0519.