Asian stock markets took a hit on Monday following mixed U.S. economic data, which reignited concerns that the Federal Reserve may raise interest rates again. Hong Kong’s main market index plunged 2.3%, while Shanghai, Tokyo, and Sydney also experienced declines. In addition, oil prices retreated.
Data from the U.S. government revealed that the producer price inflation accelerated in July, causing Wall Street’s benchmark S&P 500 index to slip 0.1% on Friday. Previous data also indicated a faster rise in consumer prices for the month of July. These setbacks have led to concerns that the Federal Reserve may proceed with further rate hikes.
The Shanghai Composite Index fell 1.1% to 3,154.16, while the Nikkei 225 in Tokyo shed 1% to 32,160.30. The Hang Seng in Hong Kong also saw a significant decline. South Korea’s Kospi retreated 1%, and Sydney’s S&P-ASX 200 was 0.8% lower. New Zealand and Southeast Asian markets were affected as well.
Wall Street also experienced a decline, with the S&P 500 falling to 4,464.05 on Friday. The producer price index rose 0.8% over a year earlier, and the Nasdaq composite fell 0.7% to 13,644.85. Despite hopes that the Fed would view inflation as under control, the data clashed with this expectation.
Critics have cautioned against the consensus that inflation is indeed under control, warning that the economy may not avoid a recession and that the Fed has yet to end its rate hike cycle. The central bank is expected to make no change to the fed funds rate at its upcoming September meeting, but uncertainties remain.
Bond yields rose in response to the data, with the 10-year Treasury yield climbing to 4.16% from 4.10% late Thursday. Major U.S. retailers, including Home Depot, Target, and Walmart, are set to report quarterly results this week.
In energy markets, benchmark U.S. crude lost 72 cents to $82.47 per barrel, while Brent crude fell 76 cents to $86.05 per barrel. The dollar also saw a slight decline against the yen and the euro.
