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Stock market today: Asian markets track Wall Street decline

May 1, 2023, 10:44 PM | Updated: May 2, 2023, 8:56 pm

People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. (AP Photo/Jul...

People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. (AP Photo/Julia Nikhinson)
Credit: ASSOCIATED PRESS

(AP Photo/Julia Nikhinson)

Asian shares declined Wednesday, tracking losses on Wall Street as shares of beleaguered banks tumbled again and worries about the U.S. economy deepened.

U.S. futures edged higher while oil prices were little changed.

Investors are waiting for the Federal Reserve’s next move on interest rates. Wrapping up a two-day policy meeting later in the day, the U.S. central bank is widely expected to raise its key rate by a quarter percentage point to 5%-5.25% to try to finally tamp down inflation.

Meanwhile, a political stalemate left the U.S. edging ever closer to what would be a catastrophic default on government debt. President Joe Biden invited the top four congressional leaders to face-to-face talks at the White House next week to try to resolve the problem.

“Risk sentiments are back to a cautious mood this week, having digested many of the big tech earnings and a series of uncertainties are now back onto the radar for the bulls to tackle,” Yeap Jun Rong of IG Research said in a commentary.

Markets in Japan and China were closed Wednesday for holidays. In Hong Kong, the Hang Seng index lost 1.9% to 19,563.59. South Korea’s Kospi shed 0.9% to 2,500.82 and the S&P/ASX 200 in Sydney declined 1.1% to 7,819.10. Shares also fell in Taiwan and Southeast Asia.

On Tuesday, the S&P 500 fell 1.2% to 4,119.58 and the Dow dropped 1.1% to 33,684.53. The Nasdaq composite gave up 1.1% to 12,080.51.

Some of the sharpest drops came from smaller- and mid-sized banks, which have been under heavy scrutiny as the banking system cracks under the weight of much higher interest rates.

PacWest Bancorp dropped 27.8%, Western Alliance Bancorp fell 15.4% and Comerica sank 12.4%.

Three of the four largest U.S. bank failures in history have come since March, and investors are hunting for the next likely to topple or suffer a debilitating exodus of customers.

Regulators seized hopes that the turmoil could ease.

Adding to worries, a report showed U.S. employers advertised the fewest job openings in nearly two years during March. The job market has been one of the main pillars supporting a slowing economy, and a drop-off there would likely mean a recession.

High rates have already hit the housing market sharply and hurt the banking system. Many investors are preparing for a recession to hit later this year.

Adding to the gloom, Treasury Secretary Janet Yellen said late Monday that the U.S. government could default on its debt as early as June 1 unless a divided Congress allows it to borrow more. That’s an earlier “X-date” than previously thought.

Much of the financial system is built on the assumption that U.S. government debt is the safest investment available. The hope is that Congress will strike a deal before the deadline, as it has many times before, because the alternative would be so dire.

With only weeks to go before June 1, Congress could be forced to agree to an extension of just a few months, rather than a long-term deal.

“There could be a few debt ceiling deadlines prior to the 2024 elections,” UBS strategists led by Michael Cloherty wrote in a report.

In the bond market, the yield on the 10-year Treasury slumped to 3.42% from 3.57% late Monday. But early Wednesday it was at 3.54%.

In other trading Wednesday, U.S. benchmark crude oil was unchanged at $71.66 per barrel. It tumbled $4 on Tuesday.

Brent crude, the basis for pricing international oils, gained 8 cents to $75.40 per barrel.

The dollar fell to 136.04 Japanese yen from 136.54 yen late Tuesday. The euro rose to $1.1030 from $1.1003.

National News

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Stock market today: Asian markets track Wall Street decline