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

Asian stocks mostly lower as oil hits new lows

HONG KONG – Asian markets mostly slipped Tuesday, following a sell-off in Europe and the United States, as oil prices plunged to more than five-year lows and data indicated Chinese manufacturing activity shrank in December.

The dollar and euro edged lower against the yen after losing pace Monday owing to the uncertainty caused by the weak crude, which has increased pressure on Russia’s economy, spooking investors.

Tokyo tumbled 1.80 percent, Hong Kong lost 0.65 percent, Sydney slipped 0.39 percent and Seoul was 0.62 percent lower, while Shanghai rose 0.55 percent.

In China, banking giant HSBC said its preliminary index of manufacturing activity came in at 49.5 this month, compared with 50 in November. Anything below 50 points to contraction and anything above shows growth.

The figures are the latest in a long line that show the world’s number two economy is slowing. However, Shanghai shares advanced — extending a recent bull run — on hopes the government will introduce new measures to spur growth.

Oil-linked firms are being hammered after crude prices plunged by about half from their June highs, weighed down by an oversupply on world markets, falling demand and OPEC’s decision to maintain high output levels.

Despite the benefits cheap oil brings to some, global stock markets have been dragged down by energy giants and analysts warn there could be further falls on the way.

On Tuesday in Asia, US benchmark West Texas Intermediate for January delivery fell 38 cents to $55.53 while Brent crude for January eased 48 cents to $60.58 — both to levels last seen in mid-2009.

‘More pain in store’

US shares tumbled, with the Dow off 0.58 percent, the S&P 500 falling 0.63 percent and the Nasdaq slumping 1.04 percent.

Earlier Monday, London’s FTSE 100 ended down 1.87 percent, while equity markets in France and Germany fell more than 2.5 percent.

“Oil prices continue to slide, and that is now the chief worry to Russia, which is essentially an oil-exporting economy,” Yoshihiro Okumura, general manager at Chibagin Asset Management, told Dow Jones Newswires.

“The creeping fear is that Russia may default, reminding investors of the prior Greek fiscal panic, and require a bailout. Beyond that, a ‘domino effect’ of worsening fiscal conditions at other oil-exporting nations may take hold.

“Oil prices look far from settled at the mid-$50 level, so more pain may yet be in store.”

Moscow was forced to ramp up interest rates early Tuesday, to 17 percent from 10.5 percent, after the ruble plunged to a fresh record-low against the dollar.

The slide came as the Russian central bank said weak oil prices could lead to a contraction of nearly five percent next year and as tensions with the United States over the Ukraine crisis increased.

The uncertainty pushed the yen up as traders looked for safer investments. The dollar was buying 117.75 yen early Tuesday against 117.81 yen in New York

The euro was at 146.48 yen from 146.50 yen, and $1.2441 from $1.2435.

The yen is considered a safe haven in times of turmoil.

Gold was at $1,198.07 an ounce compared with $1,210.54 late Monday.

source: business.inquirer.net