Rate hikes, inflation tug Asian shares, British pound lower

Asian shares tumbled and the British pound sank further on Monday, reflecting pessimism over efforts by central banks around the world to curb inflation.

Japan's benchmark Nikkei 225 shed 2.6 per cent to 26,462.48. Australia's S and P/ASX 200 dipped 1.5 per cent to 6,479.30.

South Korea's Kospi dropped 3.1 per cent to 2,219.75. Hong Kong's Hang Seng gave up 0.5 per cent to 17,851.36, while the Shanghai Composite lost 0.6 per cent to 3,069.65.

The British pound's slide against US dollar picked up pace last week after the UK's new government outlined plans to cut taxes and boost spending.

The plan has has sparked concerns that increased public borrowing will worsen the nation's cost-of-living crisis.

The pound dipped as low as USD 1.0349 per US dollar early on Monday but then rebounded to USD 1.0671, down 2.3 per cent. It fell 3 per cent on Friday.

The recent moves by the US Federal Reserve and other central banks around the world to raise interest rates are designed to curb decades high inflation, but they also threaten a recession, if the rates rise too much or too quickly.

Wall Street ended last week with widespread selling, leaving major indexes with their fifth loss in six weeks.

Data on European business activity was discouraging, and a separate report suggested US activity is also still shrinking, though not quite as badly as in earlier months.

The S and P 500 sank 1.7 per cent on Friday, to 3,693.23, its fourth straight drop. The Dow, which at one point was down more than 800 points, lost 486.27 points, or 1.6 per cent, to close at 29,590.41. The Nasdaq fell 1.8 per cent to 10,867.93.

Smaller company stocks did even worse. The Russell 2000 fell 2.5 per cent to close at 1,679.59.

More than 85 per cent of stocks in the S and P 500 closed in the red, with technology companies, retailers and banks among the biggest weights on the benchmark index.

Last week, the Fed lifted its benchmark rate, which affects many consumer and business loans, to a range of 3 per cent to 3.25 per cent.

It was near zero at the start of the year. The Fed also released a forecast suggesting its benchmark rate could be 4.4 per cent by the year's end, a full point higher than envisioned in June.

In energy trading on Monday, benchmark US crude fell 84 cents to USD 77.90 a barrel in electronic trading on the New York Mercantile Exchange. US crude oil prices slid 5.7 per cent on Friday to their lowest levels since early this year on worries that a weaker global economy will burn less fuel.

Brent crude, the international standard, edged down 87 cents to USD 85.28 a barrel.

The recent rise in the US dollar against other currencies is a concern for many countries. It dents profits for US companies with overseas business, and puts a financial squeeze on much of the developing world.

When the dollar approached 146 yen last week, the Japanese government and the Bank of Japan intervened. The dollar has been trading at about 143 yen since then.

It edged up Monday to 143.90 Japanese yen from 143.32 yen late on Friday. The euro cost 96.32 cents, down from 96.88 cents.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)