Asian markets were mixed with confidence at a premium on Tuesday as traders expected further Federal Reserve rate hikes and a possible recession.
Wall Street again suffered losses after surrendering on Friday in response to US central bank boss Jerome Powell’s warning that further tightening was needed to bring inflation down from a 40-year high.
Betting on a third consecutive three-quarter point gain next month has surged since his comments, puncturing the recent market-wide rally from June lows.
Fears that the Fed’s current priority to contain inflation at all costs will hurt the world’s top economy, which is already in a technological recession following two straight quarters of contraction. is rising.
“Markets are in turmoil because they fear that the Federal Reserve could trigger a hard landing. They’re going to raise interest rates and go into a recession, which will affect the economy and businesses,” said Terry Spath of Zuma Wealth. It will be very painful for profits.” Bloomberg he told television.
Sentiment remained weak after Monday’s setback, but Asian stocks improved slightly.
Tokyo, Sydney, Seoul, Singapore, Jakarta and Wellington rose, while Hong Kong, Shanghai and Manila fell.
Minneapolis Fed President Neil Kashkari said traders seem to have accepted the fact that policymakers are focused on fighting rising prices after the plunge following Powell’s speech.
“People now understand the seriousness of our commitment to bring inflation back to 2%,” he said.
But while central banks around the world have pledged to raise rates to combat inflation, the main driver of the rise remains a headache.
OPEC kingpin Saudi Arabia’s warning of possible production cuts put renewed upward pressure on commodities, offsetting concerns about a hit to demand from a slowing economy.
Dwindling optimism about an impending Iran nuclear deal, renewed unease in Libya and economic woes in China were adding to the strength in oil markets.
ING Groep NV’s Warren Patterson said: “New supply risks from Libya combined with uncertainty about the upcoming OPEC+ meeting provided a boost.
However, he added, “Fundamentally, the market is in a more comfortable position and without major supply disruptions and OPEC+ intervention, it will be difficult to see any significant gains in the short term.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: 1.0% UP at 28,162.52 (break)
Hong Kong – Hang Seng Index: down 1.8% at 19,669.45
Shanghai – Composite: down 0.6% at 3,220.96
EUR/USD: down to $0.9985 from $0.9998 on Monday
GBP/USD: down from $1.1703 to $1.1692
EUR/GBP: fell to 85.40p from 85.42p
Dollar/yen: 138.73 yen → 138.59 yen
West Texas Intermediate: down 0.3% to $96.68 a barrel
Brent North Sea Crude: down 0.7% at $104.38
New York – Dow: down 0.6% to 32,098.99 (close)
London – FTSE 100: Closed for Public Holidays