Asian markets mixed after Wall St tumble as recession fears return

HONG KONG - Markets were mixed Thursday while oil prices fell and the dollar weakened after disappointing US data renewed worries about a recession in the world's biggest economy.

The optimism that has flowed through trading floors since the start of the year took a knock this week as concern about inflation and rising interest rates are replaced by growth fears and their impact on company profits.

The downbeat mood offset hopes that China's economy will enjoy a strong recovery this year -- having suffered its worst annual growth in 46 years in 2022 -- as it moves away from its zero-Covid policy.

All three main indexes on Wall Street sank more than one percent Wednesday in response to figures showing retail sales, and shrank at the quickest pace in more than a year, while producer prices fell the most since the beginning of the pandemic. 

Industrial production also came in worse than forecast.

While data indicating the economy was struggling has in recent months spurred equities on hopes it will allow the Federal Reserve to slow down its pace of rate hikes, analysts said traders are now concerned about the economic outlook.

"'Bad news is bad news' once again for markets, with weak retail sales and industrial production seeing risk assets sell-off," said National Australia Bank's Tapas Strickland.

The data "adds to the theme of the economy slowing and heading into recession in 2023, and pushes back on the soft landing narrative dominating markets since January".

Tokyo, Hong Kong, Singapore, Mumbai and Manila all fell, though Shanghai, Sydney, Seoul, Bangkok and Jakarta edged up.

Wellington's NZX 50 and the New Zealand dollar suffered only small losses despite Prime Minister Jacinda Ardern's shock announcement that she will step down next month, saying she no longer has "enough in the tank".

Expectations that US interest rates will not rise as much as previously feared weighed on the dollar, with the yen bouncing back strongly after Wednesday's Bank of Japan decision not to further tweak monetary policy.

However, several Federal Reserve officials have pushed back against such speculation, warning they will continue to tighten policy until they have brought inflation down from its multi-decade highs.

Worries about recession were also weighing on oil prices, despite hopes for a spike in demand as China reopens to the world. Both main contracts dropped around one percent in afternoon exchanges.

But SPI Asset Management's Stephen Innes said Asian investors could be in for a positive year.

"The clear message to start 2023 has been clear as a whistle: while last year was about Fed and ECB normalization, this year will be about China and Japan normalization, which should continue to drive Asia’s fortunes higher in 2023," he said in a note. 

Key figures around 0710 GMT 

Tokyo - Nikkei 225: DOWN 1.4 percent at 26,405.23 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 21,656.55

Shanghai - Composite: UP 0.5 percent at 3,240.28 (close)

Dollar/yen: DOWN at 127.84 yen from 128.80 yen on Wednesday

Euro/dollar: UP at $1.0805 from $1.0797 

Pound/dollar: DOWN at $1.2341 from $1.2344

Euro/pound: UP at 87.53 pence from 87.43 pence

West Texas Intermediate: DOWN 1.2 percent at $78.51 a barrel

Brent North Sea crude: DOWN 1.0 percent at $84.13 a barrel

New York - Dow: DOWN 1.8 percent at 33,296.96 (close)

London - FTSE 100: DOWN 0.3 percent at 7,830.70 (close) 

Agence France-Presse

Stock market rally fades ahead of US holiday

BEIJING  — The rally in global stock markets, which saw the Dow close above 19,000 for the first time, petered out on Wednesday as investors prepared for a holiday in the U.S.

KEEPING SCORE: Britain’s FTSE 100 rose 0.3 percent to 6,636 while Germany’s DAX shed 0.6 percent to 10,655. France’s CAC 40 dropped 0.4 percent to 4,529. On Wall Street, the futures for the Dow Jones industrial average and the Standard & Poor’s 500 index were both unchanged, a day after the Dow closed above the 19,000 mark for the first time. The U. S. markets will be closed Thursday for Thanksgiving holiday.

WALL STREET: U.S. markets have been the focus since the election of Donald Trump as U.S. president, which many investors bet will be positive for companies. They expect less regulation of financial services and possibly tax cuts as well as spending on infrastructure. He has affirmed plans to withdraw from the Trans-Pacific Partnership but avoided mentioning his campaign pledge to build a wall along the Mexican border. “As Trump has rowed back and not mentioned some of his more extreme policy sound bites, some worries about the nature of his presidency may have begun to abate,” Alex Furber of CMC Markets said in a report. That has helped U.S. indexes hit record highs, with the Dow surpassing 19,000 for the first time and closing at a record high six times in the two weeks.

ANALYST’S TAKE: “The bulls have got control here,” Chris Weston of IG said in a report. “U.S. equity and many other developed markets are going higher, at least in the short-term.” Weston noted investors assume the U.S. Federal Reserve will go ahead with an interest rate hike in December. “Emerging markets have found support and are even attracting buyers,” said Weston. “If the Fed were to assess financial conditions in the wake of a potential rate hike they would be wholly enthused.”

ASIA’S DAY: Sydney’s S&P-ASX 200 rose 1.3 percent to 5,484.40 and Seoul’s Kospi advanced 0.2 percent to 1,987.95. India’s Sensex gained 0.5 percent to 26,081.22 and Hong Kong’s Hang Seng ended unchanged at 22,676.69. The Shanghai Composite Index shed 0.2 percent to 3,241.14. Japanese markets were closed for a holiday. Benchmarks in New Zealand and Taiwan gained while Indonesia retreated.

ENERGY: Benchmark U.S. crude fell 16 cents to $47.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 21 cents on Tuesday. Brent crude, used to price international oils, shed 12 cents to $49.00 in London. The contract added 22 cents the previous session.

CURRENCY: The dollar was roughly steady at 111.21 yen while the euro fell to $1.0615 from Tuesday’s $1.0630. TVJ

source: business.inquirer.net

Global stocks hammered as oil prices push further below $30

NEW YORK, United States—Stock markets around the world fell heavily Friday as investors reacted to new 12-year lows for oil prices and a big drop in Chinese equities.

A 3.6 percent drop in the Shanghai index pushed the Chinese market into an official bear market—defined as a 20 percent fall from a recent high—and sparked a wave of selling that extended from Frankfurt to Moscow to New York.

“Pervasive gloom,” read the title of a Barclays note.

Barclays slashed its forecast for oil prices due to a “worsening” macro outlook and predicted further European Central Bank stimulus in light of deflationary worries. On the positive side, the “pessimism about US growth is overdone in light of solid labor market momentum,” Barclays added.

“The markets are trapped in a vicious circle,” said Alexandre Baradez, an analyst at IG France.

“The session started off poorly with China, which set things off, leading to oil prices falling, then European markets and Wall Street dropping.”

Frankfurt fell 2.4 percent, Paris 2.3 percent and London 1.9 percent. The Dow in the US ended 2.4 percent lower after dropping more than 3.0 percent earlier in the session.

The leading Moscow index dropped 5.8 percent, while Brazil’s Ibovespa index lost 2.4 percent.

Global recession?

The widespread market losses over the start of 2016 has sparked talk of the potential for a global recession.

David Levy, portfolio manager at Kenjol Capital Management, said such a downturn would likely be less severe than in 2008 because fewer assets are overvalued.

“Even if we are in a global recession, I don’t think the damage will be nearly as significant as a 2008-type event,” Levy said.

“But certainly the evidence is giving us a higher probability of recession in 2016 and certainly the market is speaking that it believes that is a possibility.”

US oil benchmark West Texas Intermediate finished at $29.13 a barrel, taking the losses since the beginning of the year to more than 21 percent.

Industrial metals, including copper, also fell, but safe-haven gold gained.

“Investors are shifting funds into areas of perceived safety including gold and government bonds in hopes of protecting themselves,” said Jasper Lawler at CMC Markets UK.

Automakers skid lower
European auto stocks tumbled again, with Renault shedding an additional 3.4 percent after unions reported Thursday that anti-fraud investigators had raided several of the company’s sites.

Renault ended 10.3 percent lower on Thursday on the news, which raised fears of a Volkswagen-type scandal.

Shares in Peugeot, France’s biggest automaker ahead of Renault, fell 2.6 percent in Paris while Renault alliance partner Nissan’s stock closed 1.9 percent lower in Tokyo.

Daimler shares lost 1.9 percent, BMW 2.6 percent and Volkswagen 3.5 percent.

In the US, investors hammered banking shares after Citigroup set aside $250 million in reserves for its energy portfolio and warned of a deeper hit if oil prices fall further.

Citigroup tumbled 6.4 percent, while Wells Fargo, which also reported a higher hit from oil, lost 3.6 percent.

Petroleum and technology were two other weak sectors, while Disney tumbled 5.3 percent following a downgrade by Barclays due to worries about sports network ESPN’s prospects.

Key figures around 2200 GMT

New York – Dow: DOWN 2.4 percent at 15,988.08 (close)

New York – S&P 500: DOWN 2.2 percent at 1,880.29 (close)

New York – Nasdaq Composite: DOWN 3.1 percent at 4,488.42 (close)

London – FTSE 100: DOWN 1.9 percent at 5,804.10 points (close)

Frankfurt – DAX 30: DOWN 2.5 percent at 9, (close)

Paris – CAC 40: DOWN 2.4 percent at 4,210.16 (close)

EURO STOXX 50: DOWN 2.4 percent at 2,952.48 (close)

Tokyo – Nikkei 225: DOWN 0.5 percent at 17,147.11 (close)

Shanghai – Composite: DOWN 3.6 percent at 2,900.97 (close)

Euro/dollar: UP at $1.0916 from $1.0865 Thursday

Dollar/yen: DOWN at 116.96 yen from 118.06 yen

source: business.inquirer.net

Nobel Prize-winning economist Lawrence Klein dies; 93

PITTSBURGH—Lawrence R. Klein, a longtime University of Pennsylvania professor who won the Nobel Prize in economics, has died. He was 93.

His daughter Hannah Klein said her father died Sunday at his home in Gladwyne, near Philadelphia.

Born in Omaha, Nebraska, on Sept. 14, 1920, Klein studied at the University of California, Berkeley and the Massachusetts Institute of Technology before joining the Penn faculty in 1958. It was there that he developed statistical models to analyze global economic trends.

The citation that accompanied his 1980 Nobel Prize noted that few, if any, research workers in the field of economic science have had such a large impact.

source: newsinfo.inquirer.net

US stocks rise on hopes of Greece debt deal

NEW YORK - US stocks finished higher Thursday, led by a 1.2 percent gain in the Nasdaq buoyed by reports that Greece had achieved the minimum support needed to push its huge private-debt writeoff through.

At the closing bell the Dow Jones Industrial Average was up 69.78 points (0.54 percent) to 12,907.11.

The broad-based S&P 500 added 13.27 (0.98 percent) to 1,365.90, while the tech-rich Nasdaq Composite rose 34.73 points (1.18 percent) to 2,970.42.

While an official statement was still awaited, a Greek government source said that enough private creditors had agreed to the debt swap program ahead of the 2000 GMT Thursday deadline to allow it to go ahead, opening the door to a broader new rescue of the teetering Greek economy.

ATHENS - Greece seemed close to clinching a high-stakes debt swap Thursday as a deadline for bondholders to accept huge losses on their Greek holdings came and went opening the way for an urgent bailout.

Hours before the cut-off, a government source said that participation had already passed 75 percent, the minimum level sought by Athens for the deal to go through.

With the threshold met, Greece was now expected to press on towards unlocking a 130-billion-euro bailout from the European Union and IMF, a process that might include resorting to so-called collective action clauses Athens introduced to force holdouts to accept the deal.

By using the clauses, Greece would get even closer to the 95 percent participation rate the EU and IMF said is necessary to reduce Greek debt to a sustainable level of 120 percent of gross domestic product in 2020.

But the clauses could also trigger anti-default insurance contracts, known as credit default swaps, whose net value was estimated at 3.2 billion euros in February.

The Greek government will make an announcement on the swap at 0600 GMT on Friday, a finance ministry source said earlier.

And eurozone finance ministers were set to review the swap in a conference call later Friday, and weigh in particular the necessity to trigger the clauses or not.

Talk that the 75 percent participation level was close to being reached trickled out throughout the day helping send stock markets sharply higher across the globe and giving leaders some confidence that a page was about to be turned.

Italian Prime Minister Mario Monti said over 60 percent of private creditors had accepted the debt swap and the global bank association that led the initiative said a deal was close at hand.

"I'm optimistic that there's going to be an agreement in the next few hours," said Charles Dallara, managing director of the International Institute of Finance (IIF) and chief negotiator for the banks involved in the debt writedown.

The writedown is the biggest attempted so far, overshadowing Argentina's $82-billion default in 2002, the equivalent of 73 billion euros at the time.

It is designed to erase more than 100 billion euros ($132 billion) from Greece's near and midterm debt and replace it with new maturities.

The exercise is meant to make repayment of the debt, currently at over 350 billion euros, more sustainable in the immediate future, thereby giving the struggling Greek economy much needed breathing room.

"Tonight at midnight, a procedure of historic character reaches completion. An operation of unprecedented size and complexity to drastically cut Greek state debt," Finance Minister Evangelos Venizelos told parliament.

Officials would need two hours after the deadline to determine the level of participation, Greek news reports said.

Greek Prime Minister Lucas Papademos said he expected maximum participation as a take-up too low would ultimately mean an even greater danger of a disorderly default that the IIF warned could cost eurozone nations one trillion euros.

European stock markets posted strong gains on Thursday following rises across Asia, and Wall Street also rose on optimism that Greece's debt swap would be successful.

Directors from the International Monetary Fund have tentatively planned to meet to weigh a new loan for Greece on March 15, spokesman Gerry Rice said Thursday.

Greece and the IIF have warned that a disorderly default could occur as quickly as March 20, when Athens is due to reimburse 14.4 billion euros in debt.

The IIF report warned that if the debt swap deal failed, it could do serious damage to the eurozone and even the global economy.

Greece's own stock exchange picked up 2.78 percent in late afternoon trade.

"Global equity markets are rallying in front of the deadline for the private-sector involvement in the Greek debt swap plan, reflecting an expectation that the deal will get done and that a disorderly default will be avoided," said Briefing Research. — Agence France Presse

source: gmanetwork.com