On Monday, Asian stock markets fell in lockstep with Wall Street. The reason behind the falls was concerns about the coronavirus’s latest variant and tighter Federal Reserve policy.
Shanghai, Tokyo, Hong Kong, and Sydney all dropped at the start of a trading week. Wall Street fell on Friday as traders took money off the table in response to the Fed’s announcement that it would fight inflation by withdrawing economic stimulus more quickly.
Meanwhile, the spread of the Omicron variant has fueled concerns that new restrictions on business and travel will exacerbate supply chain disruptions and drive up inflation. The Shanghai Composite Index was down 0.8 percent at 3,605.21. Tokyo Nikkei 225 fell 2.1 percent to 27,942.84. The Hang Seng Index in Hong Kong fell 1.5 percent to 22,837.64.
Seoul’s Kospi fell 1.5 percent to 2,971.59, while Sydney’s S&P-ASX 200 fell 0.2 percent to 7,292.10.
The Sensex in India opened down 2.1 percent at 55,811.05. New Zealand advanced, while Singapore and Jakarta fell back. On Sunday, the US government issued a warning about the possibility of a surge in new infections due to Americans traveling for the Christmas and New Year’s holidays. Stocks rose briefly last week before falling after Fed officials said they were willing to accelerate the withdrawal of stimulus that had boosted financial markets.
Sen. Joe Manchin said on Sunday that he would not support President Joe Biden’s $2 trillion infrastructure, social spending, and climate plan. Manchin’s announcement may doom the plan’s chances in the Senate, divided.
The Dow Jones Industrial Average fell 1.5% to 35,365.44 points. The Nasdaq Composite Index, dominated by technology stocks, fell 0.1 percent to 15,169.68. Federal Reserve suggested that it may accelerate the reduction of bond purchases, which inject money into financial markets and keep interest rates low. It lays the groundwork for the Fed to raise interest rates next year.
Throughout 2021, inflation has been a growing source of concern. Higher raw material costs and supply chain issues have increased overall costs for businesses. Therefore they had to raise prices on goods to compensate.