Asian Stocks Fall to 1 Year Low
Following a wide sell-off on Wall Street, Asian stocks took significant losses early on Tuesday.
Asian stocks took a hit early Tuesday. Following a widespread sell-off on Wall Street, markets were concerned about the impact of multi-year high oil prices at a time when supply chain disruptions are already putting economic activity under strain.
According to Reuters, MSCI's broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) fell 1.3% for the third straight day. Moreover, Japan's stock market (.N225) fell 2.8%, South Korea's (.KS11) went down by 2.5%, and Australia's (.AXJO) fell about 1%.
Vasu Menon, executive director of investment strategy at OCBC Bank, stated that investors are concerned about inflation as a result of supply chain disruptions and a surge in energy costs.
Oil prices hit a three-year record on Monday as OPEC+ reaffirmed it will maintain its existing output strategy as demand for petroleum products recovers, despite pressure from certain countries for a larger increase in production.
In addition, oil prices in the United States were stable at $77.60 per barrel, a day after reaching its highest level since 2014. For example, Brent crude was trading at $81.30, having reached a three-year record.
The Asian market will be monitoring to see whether troubled property developer China Evergrande(3333.HK) provides any respite to investors seeking evidence of asset disposals. On Monday, trading in the company's shares was stopped.
Early on Wall Street, the United States Senate was about to vote on a bill passed by the House of Representatives. This would prolong the United States' debt ceiling until December 2022, removing a stalemate in Congress that has worried markets.
The US dollar traded at a one-year high against main competitors ahead of crucial US payrolls data coming at the end of the week, which might provide hints on the timing of Federal Reserve stimulus reduction and the start of interest rate rises.