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Stock market today: Asian shares fall over China worries, Seoul trading closed for a holiday

by Clarence Jones

Asian Shares Mostly Lower Amid China Property Woes

Asian shares experienced a mostly lower trend on Thursday, reflecting concerns about the ongoing property market crisis in China. Trading in shares of China Evergrande Group, the heavily indebted Chinese property developer, was suspended in Hong Kong following reports that the company’s chairman, Hui Ka Yan, had been taken away and placed under police watch. Evergrande is the world’s most indebted real estate developer and its troubles are impacting China’s economic growth.

Market analysts are cautious about the situation in China’s property sector. Yeap Jun Rong, a market analyst at IG, stated that the relatively quiet economic calendar may lead to subdued sentiments and reservations about risk-taking. As a result, investors are closely monitoring developments in the Chinese property sector.

In morning trading, the Hang Seng index in Hong Kong slid by 1.2%, while the Shanghai Composite was slightly up by less than 0.1% at 3,108.51. Trading was closed in South Korea due to a holiday. Meanwhile, Japan’s benchmark Nikkei 225 dropped 1.7% to 31,813.01, and Sydney’s S&P/ASX 200 remained relatively unchanged at 7,029.30.

On Wall Street, shares ended on a mixed note as rising oil prices and bond yields increased pressure on the stock market. The S&P 500 inched up by 0.1% to 4,274.51, the Dow Jones Industrial Average slipped by 0.2% to 33,550.27, and the Nasdaq composite rose by 0.2% to 13,092.85. The stock market has witnessed significant challenges due to rising Treasury yields and increased inflationary pressures.

The 10-year Treasury yield rose further to 4.61% from 4.55%, reaching heights unseen in more than a decade. This trend reflects the market’s acceptance of higher interest rates in the future. The Federal Reserve, which traditionally lowered rates to stimulate the economy, is now experiencing inflationary pressures and has indicated that rates will not be cut further until 2024. Strategists at Bank of America state that bond yields may continue to rise, providing investors with alternatives to stocks and potentially causing downward pressure on stock prices.

Despite the challenges, experts believe that the Federal Reserve will not be overly reactive to drops in stock prices due to the overall solid state of the economy. Reports on orders for long-lasting manufactured goods, which were stronger than expected, signal that the economy remains robust. However, this strength could also keep upward pressure on inflation and push the Federal Reserve to maintain high interest rates.

In addition to these concerns, other factors such as a potential government shutdown in the US, the global economic situation, a strike by US auto workers, and the resumption of student loan repayments could further impact financial markets. The outlook for stock prices remains uncertain as these various factors continue to unfold.

In energy trading, benchmark US crude oil prices rallied to $94.62 a barrel, while Brent crude, the international standard, gained value to reach $97.45 a barrel. This surge in crude oil prices has positively impacted stocks in the oil and gas industries.

As the situation evolves, investors will closely monitor developments in the Chinese property sector, global economic indicators, and central bank policies to make informed decisions about their investments.

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