Asian stocks were mostly lower on Wednesday after Wall Street suffered its worst day in weeks, breaking a record bull run.
Japan’s benchmark Nikkei Stock Average fell 0.8% in morning trading to 39,511.88 yen. Sydney’s S&P/ASX 200 index fell 1.3% to 7,782.50. South Korea’s Kospi fell 1.4% to 2,714.18. Hong Kong’s Hang Seng Index fell 1.1% to 16,753.82, and the Shanghai Composite Index fell 0.2% to 3,070.04.
Analysts said despite recent relatively positive signs for China’s economy, there were growing concerns that the unrest rocking Wall Street could spill over into Asia.
“Investors believe this disruption could signal the beginning of a more significant market correction,” said Stephen Innes, managing partner at SPI Asset Management.
China has set an ambitious target for economic growth of around 5% this year as it seeks to overcome recent problems in its real estate sector and the lingering effects of pandemic-era disruptions.
On Wall Street, the S&P 500 index fell 37.96 points, or 0.7%, to 5,205.81, its worst day in four weeks. This is the second consecutive year of decline after hitting a new high at the close of last week.
Other indexes worsened. The Dow Jones Industrial Average fell 396.61 points, or 1%, to $39,170.24, also falling further from a record. The Nasdaq Composite Index fell 156.38, or 1%, to 16,240.45, and the small-cap Russell 2000 index fell 1.8%.
Health insurance companies led the market decline on concerns about future profits after the U.S. government announced lower-than-expected Medicare Advantage rates. Humana fell 13.4%. Tesla, meanwhile, fell 4.9% after delivering fewer cars in early 2024 than analysts expected.
Traders have already sharply lowered their expectations for how many rate cuts the U.S. Federal Reserve will cut this year, halving them from the six they expected at the start of the year. This would be in line with three rate cuts that Fed officials themselves have been hinting at.
With the U.S. economy continuing to perform better than expected, investors say it’s increasingly likely that the Fed will cut interest rates just twice this year. Gargi Chaduri, chief investment and portfolio strategist for the Americas at BlackRock, suggests investors continue to bet on a wide range of investments rather than “timing the market or the Fed.”
In the bond market, the yield on the 10-year U.S. Treasury rose to 4.35% from 4.33% late Monday.
The two-year Treasury yield, which is more closely tied to expectations for Fed action, fell to 4.69% from 4.71% as of late Monday.
High interest rates are designed to slow down the economy by making borrowing more expensive. Investment prices also fall, as it becomes more attractive for investors to put their money into safer alternatives. Bitcoin fell 5.4%.
In addition to concerns that interest rates will remain high, critics say the U.S. stock market is simply too expensive, having soared more than 20% in six months. The company will likely need to grow its profits significantly to justify such a big move.
In energy trading, benchmark U.S. crude oil added 3 cents to $85.18 a barrel. Brent crude, the international standard crude, rose 10 cents to $89.02 a barrel.
In currency trading, the dollar rose from 151.54 yen to 151.61 yen. The euro rose to $1.0775 from $1.0776.
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AP Business Writer Stan Cho contributed.
