Asian stocks wobble amid suspicion of growth

ryanniesMay 18, 2022

The US dollar has stabilized as Singapore — Asia’s stock markets struggled to bring recent rises to Wednesday’s four consecutive sessions, with inflation and drag from rising interest rates returning to global growth prospects.

MSCI’s widest non-Japanese Asia Pacific stock index has given up its previous profits to trade flat by the morning. Japan’s Nikkei Stock Average rose 0.3%, while miners raised Australia’s stock price by about 0.7%.

Overnight, the Wall Street index surged and the dollar rebounded from nearly 20 years of highs as investors pushed inflation and recession concerns behind their heads.

But analysts suspect it could continue, and by the time Asian traders awoke, US stocks had lost momentum. S & P 500 futures fell 0.2% early in the Asian session and Nasdaq futures fell 0.4%.

Shane Oliver, Chief Economist and Head of Investment Strategy at AMP Capital in Australia, said:

“But the risks of inflation, monetary tightening, the war in Ukraine and China’s growth are still high and still indicate a further decline in the stock market,” he said.

The dollar was also stable after an overnight kick as Australian wage data lacked expectations and lowered the Australian dollar.

The greenback stabilized the euro at $ 1.0536 and paused the strong bounce of Sterling at $ 1.2480. The dollar index remained at 103.370.

“It’s too early to call for a long-term peak in the dollar, and retracement should be shallow,” Westpac analysts said. “But some two-way integration between 102-104 is probably short-term,” they added, referring to the dollar index.

Negative shock

Positive data helped the short-term mood, US retail sales met expectations for a solid increase in April, and industrial production exceeded expectations.

Wednesday’s data showed that the Japanese quarter was smaller than traders were afraid of.

Shanghai is also heading towards the end of the blockade, and China’s deputy prime minister made a calm comment to technical executives on the latest signs of lower pressure.

But the good news was offset by a reminder from Federal Reserve Chairman Jerome Powell that raising interest rates and perhaps pain would be needed to curb inflation.

Investors priced a 50 basis point US rate hike in June and July and are seeing the benchmark federal funds rate rise by 3% by early next year.

All tenor treasury was sold overnight in anticipation of rising interest rates, but the gap between short-term and long-term bond yields as market prices at this year’s rate hike risk could drag long-term growth. Is shrinking.

Benchmark 10-year Treasury bonds are stable in Asia, with a yield of 2.9805, just below 3%.

European yields are also rising as the European Central Bank is more likely to rise 25 basis points around July. Dutch central bank governor Klaas Knot said the rise should not be denied overnight.

Commodities rebounded against stock prices this week as markets withheld hopes for growth, but Wednesday showed signs of weakening as oil fell overnight.

Brent crude oil futures were up 0.3% to $ 112.29 and US crude oil futures were up 0.8% to $ 113.35.

S & P Global Ratings has lowered growth forecasts for China, the United States and the Eurozone.

“The world economy continues to face an extraordinary number of negative shocks,” said Chief Economist Paul F. Grünwald.

“Two developments have changed the macro situation,” he said. Russia invaded Ukraine, causing commodity prices to skyrocket and inflation.

(Edited by Sam Holmes)