by Elaine Kurtenbach
Asian markets fell on Friday on the tail of Wall Street’s worst monthly loss since the start of the pandemic.
Tokyo fell 2% and Australia’s benchmark 2.3%. Markets in Shanghai and Hong Kong remained closed for the holidays.
The S&P 500 ended September down 4.8%, its first monthly decline since January and the biggest drop since March 2020.
After climbing sharply for much of the year, the stock market has been volatile in recent weeks with the spread of the more contagious delta version of COVID-19, increased long-term bond yields and word that the Federal Reserve will support its support. can start opening up for the economy.
A quarterly survey by the Bank of Japan found that business sentiment among Japanese manufacturers has reached its highest level in nearly three years.
Sentiment among large manufacturers rose from 14 to 18, according to the results of the “Tankon” survey released on Friday. This is the highest level since the end of 2018. The reading for non-manufacturers only jumped from 1 to 2.
However, this and several other surveys have found manufacturers grappling with shortages of computer chips and other components that could hinder their recovery from the pandemic amid disruptions in supply chains and shipping.
Tokyo’s Nikkei 225 fell 590.83 points to end at 28,861.83, while the S&P/ASX 200 fell 2.3% to 7,165.10. The Kospi was down 1.4% at 3,026.87 in Seoul. Shares also declined in Taiwan and Southeast Asia.
The S&P 500 lost 1.2% on Thursday, down 4.8% in its first monthly decline since January and its biggest since March 2020, when the viral outbreak rocked markets as it wreaked havoc with the global economy.
The benchmark index is still up 14.7% for the year.
The S&P 500 fell 51.92 points to end at 4,307.54. The Dow Jones Industrial Average fell 1.6% to end at 33,843.92, while the Nasdaq fell 0.4% to 14,448.58. Shares of smaller companies also declined. The Russell 2000 Index fell 0.9% to 2,204.37.
Bond yields fell. The yield on the benchmark 10-year Treasury note for several types of loans fell from 1.50% to 1.48% late Wednesday. It was as low as 1.32% from a week ago.
All sectors of the S&P 500 ended in the red on Thursday, with a mix of technology stocks, banks and companies providing consumer goods and services accounting for much of the pullback. Over 90% of the index’s shares fell.
In recent weeks, economic data has shown that the highly contagious delta variant has reduced consumer spending and job market recovery.
The Labor Department reported that unemployment applications rose for the third week in a row and exceeded economists’ estimates. The Commerce Department raised its forecast for economic growth during the second quarter to 6.7%, slightly better than economists expected, but it expects growth to slow to 5.5% during the third quarter.
Inflation is another cause for concern. A wide range of companies have issued warnings about the impact of rising prices on their finances. Sherwin-Williams and Nike are among several companies that have warned investors about supply chain problems, high raw material costs and labor issues.
Investors are still trying to ascertain whether those issues are temporary and part of the economic recovery or could last longer than expected. The upcoming round of corporate earnings reports could shed light on how companies are tackling those problems.
On Thursday, Congress approved a bill to fund the US government until December 3rd and avoid a partial federal shutdown. But the dispute between Democrats and Republicans about raising the country’s debt limit remains unresolved.
Homebuilders largely fell after a report showed average long-term mortgage rates climbed above 3% this week for the first time since June. Mortgage rates track the direction in the 10-year Treasury yield. According to mortgage buyer Freddie Mac, the average rate for a 30-year mortgage rose to 3.01%. The rate averaged 2.88% last week and a year ago.
High mortgage rates limit the purchasing power of homebuyers, potentially something homeowners will have. LGI Homes fell 5.1% and PulteGroup 4.2%.
In other trade, US benchmark crude oil fell 23 cents to $74.80 a barrel in electronic trading on the New York Mercantile Exchange on Friday. It rose 18 cents to $75.03 a barrel on Thursday.
Brent crude oil rose 29 cents to $78.02 a barrel.
The dollar was almost unchanged at 111.28 JPY. The euro fell from $1.1580 to $1.1578.
AP Business Writers Alex Veiga and Damien J Trois contributed.