Asian markets track Wall St lower as recession fears return

New Zealand stocks and the local dollar saw muted losses after Prime Minister Jacinda Ardern said she would resign next month – Copyright AFP Ludovic Marin

Oil prices fell on Thursday, along with most stocks and the dollar weakened after disappointing U.S. data raised renewed concerns about a recession in the world’s largest economy.

The optimism that has flowed through the trading floor since the start of the year has faltered this week as worries about inflation and rising interest rates have been replaced by fears of growth and their impact on company profits.

The pessimistic mood overshadowed hopes that China’s economy will enjoy a strong recovery this year – suffering its worst annual growth in 46 years in 2022 – as it moves away from its zero-covid policy.

Wall Street’s three main indexes sank more than one percent on Wednesday in response to data showing retail sales and contracted at their fastest pace in more than a year, while producer prices fell the most since the start of the pandemic.

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Industrial production has also been worse than forecast.

– ‘bad news bad news’ –

While data indicating the economy was struggling has buoyed equities in recent months on hopes it will prompt the Federal Reserve to slow its rate hikes, analysts said traders are now worried about the economic outlook.

National Australia Bank’s Tapas Strickland said “bad news is bad news” for markets once again, with weaker retail sales and industrial production due to the sell-off of risky assets.

The data “adds to the theme of the economy slowing and heading into recession in 2023 and pushes back the soft landing narrative that has dominated markets since January”.

Tokyo, Hong Kong, Shanghai, Singapore and Manila all fell in early trade, although Sydney, Seoul and Jakarta rose.

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Wellington’s NZX 50 and the New Zealand dollar were marginally lower despite Prime Minister Jacinda Ardern’s shock announcement that she will step down next month, saying she no longer has “enough in the tank”.

Fears that US interest rates will not rise as much as previously weighed on the dollar, with the yen rebounding strongly after Wednesday’s decision by the Bank of Japan to make no further changes to monetary policy.

However, several Federal Reserve officials have pushed back against such speculation, warning that they will continue to tighten policy until they bring inflation down from multi-decade highs.

Recession concerns were also weighing on oil prices, despite hopes for increased demand as China reopens to the world. Both major contracts fell more than one percent in early exchange.

But Stephen Innes of SPI Asset Management said Asian investors could be in for a positive year.

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“The clear message to start 2023 is clear as a whistle: last year was about Fed and ECB normalization, this year will be about China and Japan normalization, which will further boost Asia’s fortunes in 2023,” he said in a message. Note.

– Main figures around 0230 GMT –

TOKYO – Nikkei 225: Down 1.2 percent at 26,468.62 (break)

Hong Kong – Hang Seng Index: Down 0.7 percent at 21,526.99

Shanghai Composite: Down 0.1 percent at 3,219.90

Dollar/yen: Down to 128.60 yen from 128.80 yen on Wednesday

EUR/USD: Down from $1.0785 to $1.0797

Pound/Dollar: Down from $1.2322 to $1.2344

Euro/pound: UP 87.51 pence to 87.43 pence

West Texas Intermediate: Down 1.3 percent to $78.45 a barrel

Brent North Sea crude: down 1.1 percent to $84.02 a barrel

New York – Dow: Down 1.8 percent at 33,296.96 (close)

LONDON – FTSE 100: Down 0.3 percent at 7,830.70 (close)

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