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Hong Kong (AFP) – Most markets fluctuated in Asian trading on Tuesday as traders grew concerned that further interest rate hikes could tip economies into deep recessions, with the mood also clouded by worsening the war in Ukraine and worries about China’s prospects.
Focusing on inflation, analysts said Consumer Price Index data released later this week will be crucial for the direction of risk assets – another big reading could trigger a fresh run. selling stocks and a soaring dollar.
Investors had hoped that a series of one-off rate hikes by the US Federal Reserve this year would begin to weigh on the economy and slow the runaway price rush, allowing policymakers to slow their pace of monetary tightening.
But a better-than-expected jobs report released on Friday underscored the central bank’s hard work to bring inflation down from four-decade highs, and many observers are warning that a recession is all but inevitable.
World Bank chief David Malpass said there was a “real danger” of a global contraction next year, adding that the soaring dollar was weakening the currencies of developing countries and pushing their debt to soar. “heavy” levels.
And JP Morgan boss Jamie Dimon told CNBC that if the US economy holds up now, it faces several headwinds, including rising rates, soaring inflation, Fed tightening and the war in Ukraine.
He added that he saw a US recession six to nine months away and the S&P 500 could still fall 20%.
Barings strategist Christopher Smart said: “It’s no wonder investors are entering the week in a bad mood, especially with Ukrainian headlines signaling a further escalation in geopolitical tensions.
“Of course, markets are supposed to be looking ahead, but it’s hard not to see the next few quarters bring the same.”
After another losing streak in New York, Asia again struggled.
Tokyo lost more than 2% as traders returned from a long weekend to catch up on Monday’s retreat, while Hong Kong was again hit by strong selling in technology companies, bringing down the Hang Seng index below 17,000 points for the first time since late 2011. .
Seoul lost more than 2%, while Taipei fell as semiconductor companies including TSMC were hammered by new US export controls aimed at restricting China’s ability to buy and manufacture high-end chips with military applications. Jakarta was also down.
Still, bargain shoppers helped push gains in Shanghai, Singapore, Wellington and Manila. Sydney was flat.
There was a glimmer of optimism for investors in comments from Fed Vice Chairman Lael Brainard, who appeared to hint at a more cautious tone for policy as previously announced hikes trickle down to the economy.
But Stephen Innes of SPI Asset Management said traders would likely be cautious in their reaction to the remarks.
“With the market in ‘fool me once, shame on me, fool me twice, shame on you’ mode, investors should be 100% on the defensive, turning away from classic risk aversion strategies as that local conversations defer to risk aversion,” he said. in a comment.
In the currency markets, the dollar remained king as the US led the monetary tightening campaign, and eyes are on the reaction in Tokyo as the yen tumbles towards the 145.90 level that saw the massive government intervention last month.
Key figures around 03:00 GMT
Tokyo – Nikkei 225: 2.3% drop to 26,480.97 (pause)
Hong Kong – Hang Seng Index: DOWN 1.3% to 16,985.14
Shanghai – Composite: UP 0.1% to 2,976.98
Pound/dollar: DOWN to $1.1048 from $1.1059 on Monday
Euro/dollar: DOWN at $0.9690 against $0.9708
Euro/pound: DOWN to 87.71 pence vs. 87.76 pence
Dollar/yen: FALL to 145.67 yen against 145.72 yen
West Texas Intermediate: DOWN 0.3% to $90.84 a barrel
North Sea Brent: 0.2% decline to $96.00 a barrel
New York – Dow: DOWN 0.3% to 29,202.88 (closing)
London – FTSE 100: 0.5% decline at 6,959.31 (close)
© 2022 AFP