Asia shares struggle, oil tumbles as recession fears heighten By Reuters

© Reuters. FILE PHOTO: People wearing protective masks are reflected on an electronic board displaying Japanese stock prices outside a brokerage in Tokyo, Japan, Oct. 5, 2021. REUTERS/Kim Kyung-Hoon

By Stella Qiu and Alun John

BEIJING/HONG KONG (Reuters) – Asian stocks faltered as commodity prices fell Thursday as mounting concerns about the risks of a global recession amid aggressive rate hikes by the Federal Reserve kept broad investor sentiment fragile.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan posted a 0.5% gain in volatile trading, reversing previous losses. Shares in South Korea were down 0.7%, China’s blue chips were up 1.2% and up 0.2%.

Chinese tech stocks in Hong Kong experienced a strong rebound, rising 2.8% after Chinese President Xi Jinping chaired a top-level meeting on Wednesday that approved a plan to further develop China’s major payment companies and fintech companies. sector.

Volatility will continue as European markets open. The pan region fell 0.4%, while German and futures showed similar declines.

Both Nasdaq and S&P500 futures fell 0.1%.

The dollar fell overnight, along with US Treasury yields, after Fed Chair Jerome Powell, in testimony before the US Senate Banking Committee, underlined his commitment to curb inflation at all costs and acknowledged that a recession was “certainly a possibility”.

A Reuters poll showed that the Fed will hike another 75 basis points in July, followed by a half percentage point increase in September, and will not scale back to quarter percentage point increments until November at the earliest. †

“It’s clear the market is seeing a recession as increasingly likely, a view from Powell, who said a recession was a possibility but not their intention,” said Chris Weston, head of research at Pepperstone brokerage in Melbourne.

“Stocks have held up well despite the declines in commodities, all in all, rotating into low-risk areas of the market and defensive sectors, with predictable outflows from energy and material inventories.”

U.S. stocks rose after Powell’s comments, which some analysts said weren’t blazing a new trail before giving up on gains. The fell 0.15%, the lost 0.13% and the fell 0.15%.

Powell will give his second half-year congressional testimony later on Thursday. Investors continue to assess the risks of central banks pushing the global economy into recession as they try to curb inflation with rate hikes.

Concerns over the demand outlook have undermined commodity prices, with oil dropping to its lowest point in more than a month on Thursday. fell 2% to $109.60 a barrel and fell 2.2% to $103.89 a barrel.

Iron ore was already at its lowest level in six months, losing more than 20% in recent weeks, while hitting a 15-month low overnight.

Movements in the Treasury market on Thursday were rather subdued, following a strong rally the previous day as investors sought the safety of sovereign debt amid growing fears of a recession.

The benchmark return declined slightly to 3.1524%, hovering around its lowest level in nearly two weeks, compared to the closing price in the US of 3.156% the previous day.

The two-year yield, which is rising in line with traders’ expectations of higher Fed fund rates, came in at 3.0693%, compared to a US closing price of 3.056%.

In foreign exchange markets, the dollar lost 0.1% against a basket of major currencies, bringing the decline to 0.46% since Friday. However, the index rose more than 8% this year, reflecting broad risk-off sentiment and the dollar’s Fed-driven interest rate advantage.

Those factors were underlined by the South Korean won, which fell below the psychological threshold of $1,300 per dollar for the first time in 13 years, amid concerns about the global economic recession.

The Australian and New Zealand dollars lost ground on Thursday as commodity prices fell.

Gold was slightly lower, with spot prices trading at $1,831.32 an ounce. [GOL/]

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