Bangkok, Share fell Friday in Asia after Wall Street retreated on news that U.S. inflation jumped 7.5% in January, raising expectations the Federal Reserve will need to move forcefully to cool the economy by raising interest rates, reports AP.
The S&P 500 sank 1.8% on the report inflation was the hottest since 1982. Bond yields jumped as traders bet the Fed may have to apply the brakes to the economy with a bigger-than-usual hike in interest rates next month.
The yield on the 10-year Treasury topped 2% for the first time since August 2019, according to Tradeweb.
Asian economies also are feeling the heat of sharp price increases, with some like New Zealand already moving to raise interest rates. Others are holding off — central banks in Thailand, Indonesia and India opted this week to keep their benchmark rates unchanged.
Some countries in the region, such as China and Japan, are contending with both higher prices and slow growth and some are still entangled in coronavirus outbreaks that are clouding the outlook for their recoveries from the pandemic.
Trading has been volatile this year as investors puzzle over how quickly and by how much the Fed will raise interest rates to tame surging inflation. The benchmark S&P 500 has fallen three out of the last five weeks and is now 6.1% below the all-time high it set Jan. 3.
The strong jobs market and high inflation have forced the Federal Reserve to begin removing the massive aid it’s poured into financial markets throughout the pandemic. Raising interest rates could help rein in inflation, but would also put downward pressure on all kinds of investments, from stocks to cryptocurrencies.
Brent crude, the price basis for international oils, lost 76 cents to $90.65 per barrel.
The dollar rose to 116.06 Japanese yen from 116.02 yen. The euro slipped to $1.1380 from $1.1430.
Source: Bahrain News Agency