Friday, February 3, 2023
HomeMarketAsian markets sink under global recession fears

Asian markets sink under global recession fears

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BEIJING — Asian stock markets fell again Monday as investors wrestled with fears the Federal Reserve and European central banks might be willing to cause a recession to crush inflation.

Wall Street fell Friday after the Fed raised its forecast of how long interest rates have to stay elevated to cool inflation that is near a four-decade high. The European Central Bank warned more rate hikes are coming.

That “hawkish rhetoric” indicates “mounting pipeline risks of a global recession,” said Tan Boon Heng of Mizuho Bank in a report.

The Shanghai Composite Index
SHCOMP,
-1.31%
lost 1.3% despite China’s ruling Communist Party announcing Friday that it will try to reverse an economic slump by stimulating domestic consumption and the real estate market.

The Nikkei 225
NIK,
-1.06%
in Tokyo sank 1.1% and the Hang Seng
HSI,
-0.45%
in Hong Kong shed 0.5%.

The Kospi
180721,
-0.47%
in Seoul retreated 0.5% and Sydney’s S&P/ASX 200
XJO,
-0.08%
was 0.2% lower. Singapore
STI,
+0.42%
advanced while New Zealand
NZ50GR,
-0.65%
and other Southeast Asian markets
Y9999,
-0.61%
 
JAKIDX,
-0.40%
 
FBMKLCI,
-0.18%
declined.

Wall Street’s benchmark S&P 500 index
SPX,
-1.11%
turned in its second weekly decline after losing 1.1% to 3,852.36 on Friday for its third daily drop. It is down about 19% so far this year.

The Dow Jones Industrial Average
DJIA,
-0.85%
dropped 0.8% to 32,920.46. The Nasdaq composite
COMP,
-0.97%
lost 1% to 10,705.41.

U.S. inflation has eased to 7.1% over a year earlier in November from June’s 9.1% high but still is painfully high.

The Fed on Wednesday raised its benchmark short-term lending rate by one-half percentage point for its seventh hike this year. That dashed hopes the U.S. central bank might ease off increases due to signs inflation and economic activity are cooling.

The federal funds rate stands at a 15-year high of 4.25% to 4.5%. The Fed forecast that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

In energy markets, U.S. benchmark crude
CLF23,
+1.06%
rose 94 cents to $75.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 on Friday to $74.29. Brent crude
BRNG23,
+1.05%,
the price basis for international oil trading, gained $1.01 to $80.05 per barrel in London. It lost $2.17 the previous session to $79.04.

The dollar
USDJPY,
-0.36%
declined to 136.25 yen from Friday’s 136.56 yen.

Credit: marketwatch.com

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