Asian Shares Mostly Gain After Dow Tumbles, Into Bear Market

Asian stocks were mostly higher on Tuesday after heavy selling on Wall Street put the Dow Jones Industrial Average into what's known as a bear market. US futures and oil prices gained. Tokyo, Sydney and Shanghai advanced while Hong Kong declined. The week started out with a bout of selling amid an extended slump for many markets. The benchmark S and P 500 is down more than 7 per cent in September.

But buying kicked in as investors awaited a slew of updates on the US economy. Tokyo's Nikkei 225 index picked up 0.5 per cent to 26,571.87 and the S and P/ASX 200 added 0.4 per cent to 6,496.20. In Seoul, the Kospi rebounded from earlier losses, edging 0.1 per cent higher to 2,223.86. Hong Kong's Hang Seng lost 0.2 per cent to 17,816.77.

The Shanghai Composite index jumped 1.4 per cent to 3,092.76 after China's central bank on Tuesday moved to maintain cash flow for banks by buying securities from commercial banks, with an agreement to sell them back in the future. The official Xinhua News Agency said the People's Bank of China carried out 175 billion yuan (about USD 24.7 billion) in reverse repos "to maintain liquidity in the banking system".

Global stocks have been sagging under concerns over stubbornly hot inflation and the risk that central banks could trigger recessions as they try to cool high prices for everything from food to clothing. Investors have been particularly focusing on the Federal Reserve and its aggressive interest rate hikes. But volatility in currency markets has further roiled markets. The British pound dropped to an all-time low against the dollar on Monday and investors continued to dump British government bonds in displeasure over a sweeping tax cut plan announced in London last week.

The Japanese yen edged toward 145 to the dollar early on Tuesday. Last week, the Bank of Japan intervened in the market as the yen slipped past 145, gaining a brief reprieve. But the dollar's surge against other currencies is putting pressure on the BOJ and other central banks, especially in developing economies facing growing costs for repaying foreign loans. The pound was at USD 1.0788, up from USD 1.0686 late on Monday.

The dollar bought 144.29 yen, down from 144.65 yen, and the euro rose to 96.48 cents from 96.10 cents. Companies are nearing the close of the third quarter and with the next round of earnings reports investors will get a better sense of how companies are dealing with persistent inflation. Several economic reports are on tap for this week that will give more details on consumer spending, the jobs market and the broader health of the US economy.

The latest consumer confidence report, for September, from the business group The Conference Board will be released on Tuesday. The government will release its weekly report on unemployment benefits on Thursday, along with an updated report on second-quarter gross domestic product. On Friday, the government will release another report on personal income and spending that will help provide more details on where and how inflation is hurting consumer spending.

Seeking to make borrowing more expensive and crimp spending, the Fed raised its benchmark rate, which affects many consumer and business loans, again last week. It now sits at a range of 3 per cent to 3.25 per cent. It was near zero at the start of the year. The Fed also released a forecast suggesting its benchmark rate could be 4.4 per cent by the year's end, a full point higher than envisioned in June.

The US economy is already slowing, raising worries that rate hikes might cause a recession. The Dow was the last of the major US stock indexes to fall into what's known as a bear market on Monday, falling 1.1 per cent to 29,260.81. The Dow is now 20.5 per cent below its all-time high set on January 4. A drop of 20 per cent or more from a recent peak is what Wall Street calls a bear market. The S and P 500 fell 1 per cent to 3,655.04.

The Nasdaq dropped 0.6 per cent to 10,802.92. Smaller company stocks fell more than the broader market. The Russell 2000 dropped 1.4 per cent to close at 1,655.88. In other trading on Tuesday, US benchmark crude added USD 1.27 to USD 77.98 per barrel in electronic trading on the New York Mercantile Exchange. It sank USD 2.03 to USD 76.71 on Monday. Brent crude, used for pricing international oils, rose USD 1.34 to USD 84.20 per barrel.

(PTI)