Losses in Asian markets amid uncertainty over interest rates, corporate announcements and Covid-19

Asian stocks closed lower on Monday as US stocks lost ground last week as global market expectations for higher interest rates continued to rise.

Japan Nikkei 225 lost 1.9% in morning trading and South Korea’s Kospi slipped 1.4%. Hong Kong Hang Seng fell 2.6%, while Shanghai Composite lost 2.4%. Indicators in Singapore, Taiwan and Indonesia also recorded losses. The stock market was closed in Australia for Anzac Day, a national holiday.

The news that Emanuel Macron won the second round of the French presidential election at the weekend, securing a second term as expected, reassured the markets that France would not change course abruptly in the midst of the war in Ukraine. But a major show by populist and nationalist candidate Marine Le Pen served as a reminder of how fragile the situation can be, analysts said. Le Pen pledged to soften France’s ties with the EU, NATO and Germany and spoke out against EU sanctions on Russian energy supplies.

Rising COVID-19 cases in China are raising concerns about more pandemic lockdowns that will cut economic recovery in the region. Other countries are also facing COVID-19-related financial problems, such as a lack of tourism revenue in Japan, where cases continue to rise and fall as the country gradually opens its borders, but only to business travelers.

Investors are also watching corporate earnings announcements, including Japanese big names coming in the coming weeks. Several reports from US companies, which have already been made public, have been disappointing, contributing to the fall that ended last week on Wall Street.

The next steps from the US Federal Reserve are also high on the list of investors. The chairman of the Federal Reserve said the central bank could raise short-term interest rates by twice the usual amount in the coming meetings, starting in two weeks. The Fed has already raised its key one-day interest rate, the first such increase since 2018.

“After the heavy sell-off on Wall Street last week, the overall risk appetite in the region may also be under pressure,” said Yeap Jun Rong, strategic market analyst at IG Singapore.

Markets around the world are feeling similarly pressured by interest rates and inflation, especially in Europe, as the war in Ukraine raises the cost of oil, gas and food.