BANGKOK—Shares fell Tuesday in Europe and Asia, with Hong Kong’s benchmark down more than 2 percent as jitters over China’s outlook cast a shadow over regional markets.
U.S. markets were closed Monday, leaving investors without cues from overnight trading. Early Tuesday, the future for the S&P 500 was 0.5 percent lower, and that for the Dow Jones Industrial Average was down 0.5 percent.
Germany’s DAX fell 0.5 percent to 16,541.68 and the CAC40 declined 0.3 percent to 7,387.99. Britain’s FTSE 100 slipped 0.4 percent to 7,567.09.
In Asian trading, Tokyo’s Nikkei 225 index snapped a New Year’s winning streak that had taken it to its highest level in 34 years. It lost 0.8 percent to 35,619.18.
The dollar weakened against the Japanese yen even as a former central bank official said that the Bank of Japan is preparing to end its longstanding negative interest rate policy. The dollar bought 146.5 yen, up from 145.75 late Monday and at its highest level in more than one month.
The question of when and how the BOJ might extricate itself from more than a decade’s worth of extreme monetary easing that has kept its benchmark rate at minus 0.1 percent has hung over the market for months. Speculation over its game plan for changing it strategy has flared especially after the Federal Reserve and other central banks hiked rates sharply to help snuff out inflation that soared as economies recovered from the shocks of the pandemic.
Hong Kong’s Hang Seng shed 1.9 percent to 15,905.80. The Shanghai Composite index recovered from early losses, adding 0.3 percent to 2,893.99.
Investors were selling stocks of technology and property companies. Online food delivery company Meituan dropped 2.3 percent and video games company Tencent lost 2.4 percent. Financially troubled property developer China Garden Holding lost 5.6 percent and Sino-Ocean Group Holding plunged 9.5 percent.
China is due to provide an update in its economy on Wednesday that economists forecast will show annual growth at 5.3 percent in the last quarter, up from 4.9 percent in July–September.
Most forecasts suggest growth will slow in the world’s second largest economy this year, as Beijing continues to grapple with a crisis in its property sector and tepid consumer demand. IMF head Kristalina Georgieva warned Monday in an interview with CNBC that unless China enacts reforms to help spur more spending, it might face a “significant decline in growth rates going under 4 percent.”
Elsewhere in Asia, South Korea’s Kospi slipped 0.8 percent to 2,497.59 and the S&P/ASX 200 in Australia gave up 1.1 percent to 7,414.80. Bangkok’s SET lost 0.3 percent.
In the U.S., stocks have been roaring toward records for months, pulling the S&P 500 within 0.3 percent of its all-time high, on hopes that inflation is cooling enough for the Federal Reserve to cut interest rates several times this year.
Easier rates and yields relax pressure on economies and financial systems while boosting prices for investments.
But after a roaring start to the year, investors are growing a bit more cautious about how soon the Fed will begin cutting interest rates, how quickly, and by how much.
“I sense that the first quarter of this year will be marked by the realization that it’s too early for the central banks to cut the interest rates unless something really bad—like another bank crisis, or a real estate crisis, or another debt crisis hits the fan,” Ipek Ozkardeskaya of Swissquote Bank said in a commentary.
Traders have been betting on the Fed cutting its main interest rate six or more times through 2024, a much more aggressive track than the Fed itself has hinted at. It’s even cautioned it could raise rates if inflation refuses to buckle convincingly toward its target of 2 percent. The federal funds rate is already at its highest level since 2001.
In other trading, a barrel of benchmark U.S. crude oil picked up 14 cents to $72.82 in electronic trading on the New York Mercantile Exchange. It gained 66 cents to $72.68 on Monday.
Brent crude, the international standard, climbed 46 cents to $78.61 per barrel.
The euro fell to $1.0886 from $1.0952.
