Asia Shares Struggle, Oil Falls as Recession Fears Persist


BEIJING/HONG KONG: Asian stocks faltered as commodity prices tumbled on Thursday as growing concerns over risks of a global recession amid aggressive rate hikes by the Federal Reserve weighed on overall sentiment investors.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan reversed earlier gains to be virtually flat in Asian trading. Stocks in South Korea were down, while Japan’s Nikkei was broadly unchanged.

Hong Kong’s Hang Seng Index climbed 0.6% on news that Chinese President Xi Jinping chaired a high-level meeting on Wednesday that endorsed a plan for the healthy development of major payment and payment companies. of the fintech industry in China.

Overnight, the dollar fell alongside US Treasury yields after Fed Chairman Jerome Powell, in testimony before the US Senate Banking Committee, acknowledged that a recession was “certainly a possibility. “, but the Fed is not trying to organize one.

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A Reuters poll showed the Fed will hike interest rates by another 75 basis points in July, followed by a half-percentage-point hike in September, and not return to interest rate moves. a quarter of a percentage point before November at the earliest. .

“What is clear is that the market views a recession as increasingly likely, a view heard by Powell, who detailed that a recession was a possibility but not their intention,” Chris Weston said. , head of research at brokerage Pepperstone in Melbourne.

“Equities held up well despite the falls in commodities, overall there was a rotation towards lower risk areas of the market and defensive sectors, with predictable outflows from energy and materials stocks .”

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US stocks reversed earlier gains and ended the session slightly lower. The Dow Jones Industrial Average fell 0.15%, the S&P 500 lost 0.13% and the Nasdaq Composite fell 0.15%.

Investors continue to assess the risks of central banks pushing the global economy into recession as they attempt to rein in inflation by raising interest rates.

Concerns about the outlook for demand undermined commodity prices, with oil falling to its lowest level in more than a month on Thursday. Brent crude was down 2% at $109.49 a barrel and US crude was down 2.3% at $103.75 a barrel.

The yield on benchmark 10-year Treasuries fell slightly in early trading to 3.1430%, the lowest in nearly two weeks, from its US close of 3.156% the previous day.

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The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 3.0391% from a US close of 3.056%.

In the foreign exchange markets, the dollar eased 0.1% against a basket of major currencies, after falling 0.2% the previous session. However, the index is up more than 8% this year, reflecting general risk aversion sentiment and the dollar’s yield advantage driven by the Fed.

These factors were underscored by the South Korean won, which fell below the psychological threshold of 1,300 to the dollar for the first time in 13 years, amid concerns about the global economic downturn.

Gold was slightly lower, with spot prices trading at $1835.19 an ounce.

(Edited by Shri Navaratnam)


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