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Asia Stocks Recover But Growth Fears Cast Long Shadow

Mainland China and Hong Kong shares advanced but Tokyo retreated with investors distracted by war in Europe and soaring global prices


Asia’s major markets were in retreat on Thursday amid anxiety over the global economic outlook.
The MSCI's benchmark for global stocks gave up earlier gains on Thursday. File photo: Nicky Loh, Reuters.

 

Asia’s stock markets stopped the rot on Wednesday, posting minor gains and losses after a series of heavy knocks to investor sentiment.

Inflation, higher interest rates, China’s slowdown and the Ukraine war are all weighing heavily and, add to that a series of weak indicators around the world and downbeat forecasts from big firms, and there has been little reason for traders to be cheerful recently. 

But China stocks did rally in late trading to rebound from their worst session in nearly three weeks thanks to Beijing’s economic support measures, although gains were capped by worries over slowing growth in the Covid-hit economy.

 

Also on AF: George Soros Doubts Xi Will Last, Warns Davos of World War III

 

China’s financial regulators pledged to keep credit growth stable in the property sector and help homebuyers affected by virus outbreaks to defer mortgage payments, and the central bank said it would use various tools to appropriately increase credit and support its Covid-hit economy.

The capital Beijing further tightened its curbs on the virus with zero community transmission the target. Nationwide, China reported 590 new coronavirus cases for Tuesday, down from 688 new cases a day earlier.

Rising geopolitical tensions sapped risk appetite, as Russian and Chinese bombers flew joint patrols near Japanese and South Korea air defence zones on Tuesday in a pointed farewell to US President Joe Biden as he concluded a trip to Asia that rankled Beijing.

US Secretary of State Antony Blinken will deliver a speech on Thursday outlining US policy toward China, the State Department said.

China’s blue-chip CSI300 index rose 0.6% to 3,983.18, after dropping as much as 0.3% in morning trade, while the Shanghai Composite Index gained 1.19% to 3,107.46 points. Both the indexes fell more than 2% on Tuesday.

 

Alibaba Shares Suffer

But off the mainland, tech giants listed in Hong Kong ended up 0.3% after falling as much as 1% in morning trade, with Alibaba Group down 1.5% ahead of its quarterly results on Thursday.

Hong Kong shares finished slightly higher though after three days of losses and the Hang Seng Index gained 0.29%, or 59.17 points, to 20,171.27, while the Shenzhen Composite Index on China’s second exchange rose 1.17%, or 22.40 points, to 1,944.88.

Tokyo stocks closed lower after US shares retreated following a profit warning from the owner of Snapchat. The benchmark Nikkei 225 index ended down 0.26%, or 70.34 points, at 26,677.80, while the broader Topix index slipped 0.09%, or 1.68 points, to 1,876.58.

Indian stocks slipped with Mumbai’s signature Nifty 50 index down 0.40%, or 65.00 points, at 16,060.15.

Sydney, Seoul, Taipei, Manila and Bangkok rose, while Singapore, Jakarta and Wellington fell. London, Paris and Frankfurt were up in the morning after falling Tuesday.

 

New Zealand Dollar Soars

Globally, stock markets and the dollar moved cautiously higher before the latest Federal Reserve meeting minutes, while New Zealand’s dollar soared as its central bank joined those now aggressively jacking up interest rates.

Oil was creeping up again, which along with higher food prices meant more fuel for rising inflation that central banks globally are now struggling to contain.

“From our perspective the fears of recession are real,” said Salman Baig, a portfolio manager on Unigestion’s cross-asset solutions team, adding “the Fed has a very difficult job on its hands” to engineer a “soft landing.”

The US dollar index – which measures the currency against six major rivals – rebounded 0.16% to 101.92, a level not seen since April 26.

 

Key figures at around 0810 GMT

Tokyo – Nikkei 225 > DOWN 0.3% at 26,677.80 (close)

Hong Kong – Hang Seng Index > UP 0.3% at 20,171.27 (close)

Shanghai – Composite > UP 1.2% at 3,107.46 (close)

London – FTSE 100 > UP 0.4% at 7,516.69

Brent North Sea crude > UP 1.0% at $114.69 per barrel

West Texas Intermediate > UP 1.0% at $110.86 per barrel

New York – Dow > UP 0.2% at 31,928.62 (close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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