World

Asian stocks sink into war, inflation restrains influence on the market

BANGKOK –

Shares fell on Friday in Asia as uncertainty over the war in Ukraine and persistently high inflation sent them reeling in markets.

Hong Kong fell 3.2% and Tokyo 2.6% lower.

Investors are wondering how the world economy could grapple with price pressures and slowing growth.

Russia’s plan to revoke most-favoured-nation trade status after its invasion of Ukraine has added to worries about the economic consequences of the conflict deepening after talks between the two countries’ foreign ministers failed to reach the end of the year. specific progress has been made.

President Joe Biden plans to announce the change on Friday, according to a source familiar with the matter, who spoke on condition of anonymity to preview the announcement.

Washington has been increasing pressure to revoke what is officially called a “permanent normal trading relationship” with Russia, allowing the US and its allies to impose tariffs on Russian imports.

Tokyo’s Nikkei 225 index fell 660 points to 25,032.61 and Hong Kong’s Hang Seng index dropped 667 points to 20,222.79.

The Shanghai Composite Index lost 2.2% to 3,224.92 after Chinese Premier Li Keqiang, the country’s No. 2 leader, said the government hopes to create 13 million new jobs this year in the coming year. trying to reverse a severe economic downturn.

Premier Li Keqiang promised “employment-supporting policies” including tax and fee cuts totaling 2.5 trillion yuan ($400 billion) for businesses. Economic growth slowed to 4% from a year earlier in the final quarter of 2021, down from 8.1 percent for the full year.

Rising coronavirus cases in both mainland China and Hong Kong have added to concerns about their markets.

Kospi in Seoul fell 1.1% to 2,651.22. In Australia, the S&P/ASX 200 rose 0.7% to 7,079.10. India rose 0.2% but other markets in the region all fell.

Investors are on the sidelines ahead of the weekend, with the potential for big surprises while markets close, analysts said.

“When confidence is low, risk managers are in the driver’s seat, keeping bank and market maker liquidity to a minimum,” said Stephen Innes of API Asset Management. This could exacerbate intraday moves,” API Asset Management’s Stephen Innes said in a commentary.

“And it should come as no surprise that predicting daily market actions is as consistent as flipping a coin,” said Innes.

Stocks on Wall Street fell on Thursday in volatile trading while oil prices rebounded, with a barrel of US crude rising as much as 5.7%, before ending down 2.5%. Earlier in the day, benchmarks posted their biggest gains since June 2020 as falling oil prices seemed to ease some of the pressure from high inflation around the world.

The S&P 500 fell 0.4% to 4,259.52. The benchmark index is now 11.2% below the all-time high it set earlier this year. The Dow Jones Industrial Average fell 0.3% to 33,174.07, while the tech-heavy Nasdaq composite fell 0.9% to 13,129.96.

Shares of smaller companies hold up better than the broader market. Russell 2000 lost 0.2%, to 2,011.67.

The back-and-forth moves in oil are just some of the waves of market choice. The European Central Bank says high inflation will prompt it to complete its bond-buying program to boost its economy faster than expected. In the US, a report showed consumer prices jumped 7.9% in February from a year earlier. This was the biggest spike since 1982, although the reading was largely predictable.

Volatility has become the norm since Russia invaded Ukraine. It has raised worries about how high the prices of oil, wheat and other commodities produced in the region will be.

Investors were war-ready as high inflation was prompting central banks to raise interest rates for the first time since the pandemic began and halt programs rolled out to support the economy Global.

Analysts said Thursday’s US inflation report was what economists expected, and it did not include the most recent increase in oil and gasoline prices following Russia’s invasion of Ukraine. It also doesn’t reach the 8% threshold that can trigger an alert.

Many investors said the report would likely not change anything for the Federal Reserve, which is expected to raise its key short-term interest rate by a quarter of a percentage point next week. , the first increase since 2018. Higher rates slow the economy, and the Fed is trying to raise it enough to reduce inflation but not so much that it causes a recession.

Oil prices have corrected since their volatile swings earlier this week.

Benchmark US crude rose 26 cents to $106.28 a barrel after falling $2.68 to $106.02 a barrel on Thursday.

Brent crude, the basis for international pricing, lost 19 cents to $109.14 a barrel.

So far, both it and the US benchmark are up more than 40% for 2022, though they remain below the peaks they hit earlier this week, when US oil briefly peaked at $130.

Yields on 10-year Treasuries, which track expectations for inflation and economic growth, fluctuated shortly after the inflation report was released. It rose to 2% from 1.94% late Wednesday. Early Friday it was at 1.97%.

The US dollar rose to 116.51 Japanese yen from 116.11 yen and the euro rose to $1,1002 from $1.0987.

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