Asian stocks extend losses after Wall Street decline

Stocks in Asia slid Thursday after Wall Street benchmarks fell more than 1% in the middle of a mostly quiet and holiday-shortened week.

US futures were mixed and oil prices fell.

Investors are watching how China’s relaxation of its strict COVID-19 guidelines and the ensuing outbreaks of infection will affect business and travel.

One concern is that the massive outbreaks could produce new, potentially vaccine-resistant variants of the virus, “which could result in a global viral outbreak.” China’s reopening could still be a positive step in the long run given previous global attempts to bring virus cases under control,” IG’s Yean Jun Rong said in a comment.

Hong Kong’s Hang Seng slipped 1.0% to 19,691.33, while the Shanghai Composite Index fell 0.3% to 3,078.81.

Tokyo’s Nikkei 225 index slipped 0.9% to 26,093.67.

Seoul’s kospi slipped 1.9% to 2,236.40 after the government reported that South Korea’s industrial production fell 3.7% yoy in November, worse than forecast and a bigger fall than the 1-month decline. 2% in October. Retail sales fell 1.8% mom.

Australia’s S&P/ASX 200 was down 0.9% to 7,020.10. Bangkok’s SET Index gained 0.3% and Mumbai’s Sensex was flat.

The worst year since 2008 for the S&P 500 is coming to an end, with little data to spur trading. But later on Thursday, the US government was due to release jobless claims, a measure of employment that could shed light on how the economy is faring, as the Federal Reserve hikes interest rates to quell inflation.

The Fed has already raised interest rates seven times this year and is expected to raise them further in 2023. The interest rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast calls for no rate cut before 2024.

On Wednesday, the S&P 500 fell 1.2%, with technology, energy and industrial stocks among the largest weights in the benchmark index. It closed at 3,783.22.

The Dow Jones Industrial Average fell 1.1% to 32,875.71. The Nasdaq slipped 1.4% to 10,213.29. The Russell 2000 fell 1.6% to end at 1,722.02.

Bond returns were mixed. The 10-year Treasury yield, which drives mortgage rates, rose to 3.88% from 3.85% on Tuesday. The yield on the two-year government bond fell to 4.34% from 4.38% late Tuesday.

With two more trading days into 2022, the S&P 500 is heading for a roughly 20% decline for the year, even as earnings and margins for companies in the index have hit record highs this year. The Dow is on course for a 9.5% decline, while the Nasdaq fares much worse and is on course to plummet 34.7%.

Southwest Airlines slipped 5.2% as the airline grappled with the consequences after scrapping thousands of flight cancellations. The airline’s CEO said it could be next week before flight schedules return to normal. Other airline stocks also fell. Delta Air Lines fell 2.8% and United Airlines fell 2.4%.

Tesla rose 3.3% as it stabilized after sharp losses it suffered after reports on Tuesday that it had temporarily halted production at a Shanghai factory.

US crude prices were down 0.7% and natural gas prices fell 10.8%. That’s hurting energy stocks. Exxon Mobil fell 1.6%.

Early Thursday, US benchmark crude fell 54 cents to $78.42 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the price basis for international trade, fell 57 cents to $83.42 a barrel in London.

The US dollar fell from 134.39 yen to 133.77 Japanese yen late Wednesday. The euro rose to $1.0617 from $1.0613.

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