- Stocks Stumble on Hawkish Fed Path; Oil Trims Drop
- Robust US data firmed case for sharp Fed interest-rate hikes
- Chinese equities waver as data signal falling factory activity
Stocks in Asia fell Wednesday on the prospect of continued aggressive Federal Reserve monetary tightening and as traders evaluated data signalling China’s economy is continuing to struggle. The Chinese figures indicated factory activity shrank for a second month. Power shortages, a property sector crisis and Covid outbreaks all took a toll.
Contracts for the S&P 500 and tech-heavy Nasdaq 100 stabilized after Wall Street shares hit a one-month low. Robust US labor demand and consumer confidence data added to the case for sharp interest-rate hikes to tackle inflation. Fed officials reiterated their determination to curb price pressures.
A dollar gauge and Treasuries were steady, while a deepening yield curve inversion pointed to fears that the Fed will trigger a recession. Oil pared a slide but was still headed for a third monthly drop — the longest losing run in more than two years — hampered by the likelihood of slower global growth.
New York Fed chief John Williams said rates will need to be held in restrictive territory for “some time,” adding that this meant through 2023 — the latest official to push back on financial-market expectations of cuts later next year.
Investors are also contending with a European energy crisis as well as mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones.