fbpx
Climate crisis and migration: Greta Thunberg supports International Organization for Migration (IOM) over ‘life and death’ issueRead more United Nations (UN) Convenes Lake Chad Countries, Amid Growing Regional CrisisRead more 11 Disruptive Startups Selected for Cohort 3 of the Africa Startup Initiative Program (ASIP) Accelerator Program powered by Startupbootcamp AfricaRead more Africa Data Centres breaks ground on new Sameer facility in NairobiRead more Coffee with a human face: A union that improves livelihoods for Ugandan farmersRead more Trends Predicted to drive the retail industry in 2023Read more Vantage Capital exits Pétro IvoireRead more Afrobarometer charts path for Round 10 surveysRead more Unified communication and collaboration trends for 2023 (By David Meintjes)Read more 2023 starts with BIG IMPACT on Bizcommunity!Read more

Stocks fluctuate as traders fret over recession

show caption
Asian markets were mixed and oil fell as traders fret over a possible recession caused by central bank interest rate hikes./AFP
Print Friendly and PDF

Jul 04, 2022 - 10:04 AM

HONG KONG, CHINA — Markets swung Monday as traders fret over a possible recession caused by central bank interest rate hikes aimed at fighting soaring inflation.

Data showing a flare-up of fresh Covid-19 cases in China revived concerns about the government’s policy of locking down towns and cities to eradicate the disease, despite the economic cost.

After the S&P 500’s worst January-June since 1970, Wall Street got the second half off to a healthy start Friday as a below-forecast reading on US manufacturing provided hope banks will not go on an extended period of monetary tightening.

That followed a drop in confidence among consumers — a key driver of the world’s top economy.

However, National Australia Bank’s Rodrigo Catril said the Federal Reserve and other global financial chiefs might not ease back on their rate hikes too soon as inflation remains stuck around multi-decade highs.

“While the data is suggesting a US economic slowdown is coming, we are not yet seeing signs of an ease in inflationary pressures, an important distinction given the Fed will continue with its aggressive tightening approach until it sees evidence of the latter,” he said in a commentary.

In a sign of the struggle officials will have in controlling rising prices, figures showed eurozone inflation hit a record 8.6 percent in June. The European Central Bank is due to lift rates this month for the first time in more than a decade.

Still, while surging prices remain a huge problem, Chris Weston, at Pepperstone Group, said the psychology is “shifting radically from inflation concerns to one now where we’re firmly focused on growth”.

While New York provided a strong lead, Asia struggled.

Hong Kong dropped as investors returned from a long weekend to play catch-up with Friday’s losses, while Seoul, Taipei, Bangok and Jakarta were also down.

However, Tokyo, Shanghai, Mumbai, Sydney, Singapore, Taipei and Wellington rose.

London, Paris and Frankfurt rose in early trade, though US futures were in the red.

A rise in new Covid cases in China over the weekend weighed on sentiment among investors who fear a return to the painful lockdowns in major cities including Shanghai, which hammered the world’s number two economy.

The country saw more than 700 new infections Saturday and Sunday, having held below 50 a day for the previous two weeks.

Macau saw its first two Covid deaths at the weekend and authorities said they would consider a city-wide lockdown to fight the disease. The comments sent Hong Kong-listed shares in Macau casinos plunging.

Oil prices wobbled with concerns about recession weighing on sentiment as traders bet on a drop in demand, while the head of Asia at crude trading giant Vitol said he saw signs consumers were beginning to feel the pressure of high commodity costs.

“There’s very clear evidence out there of economic stress being caused by the high prices, what some people refer to as demand destruction,” said Mike Muller. It is “not just oil, but also liquefied natural gas”.

Key figures at around 0810 GMT 

Tokyo – Nikkei 225: UP 0.8 percent at 26,153.81 (close)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 21,830.35 (close)

Shanghai – Composite: UP 0.5 percent at 3,405.43 (close)

London – FTSE 100: UP 0.9 percent at 7,231.42

Dollar/yen: UP at 135.37 yen from 135.28 yen Friday

Pound/dollar: DOWN at $1.2116 from $1.2098

Euro/dollar: DOWN at $1.0424 from $1.0433

Euro/pound: DOWN at 86.03 pence from 86.21 pence

West Texas Intermediate: DOWN 0.1 percent at $108.36 per barrel

Brent North Sea crude: DOWN 0.1 percent at $111.51 per barrel

New York – Dow: UP 1.1 percent at 31,097.26 (close)

— Bloomberg News contributed to this story —

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.