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Asian Shares Dip as Inflation, Recession, Oil Fears Weigh

China’s markets were lifted by easing Covid curbs and new stimulus measures but global recession worries cast a shadow over Hong Kong and Tokyo

It was a case of steady-as-she-goes across the region’s trading floors with all eyes on today’s critical US Federal Reserve meeting.
Mainland China and Hong Kong stocks ended with investors worried about future monetary tightening. Photo: Reuters.


Asian stocks slipped back on Thursday tracking Wall Street’s dip off the back of persistent concerns over inflation and the threat of recession.

Chinese stocks though bucked the trend closing higher after a choppy trading day, as initial euphoria over additional stimulus measures to support an ailing economy were later countered by concerns over Beijing’s zero-Covid policy and a potential rebound in cases.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9% with the region’s investors distracted by uncertainty over the US Federal Reserve’s planned pace of interest rate hikes, the impact of the Russia-Ukraine war on food and commodity prices, and supply chain constraints exacerbated by China’s Covid curbs. 


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The Hang Seng index fell 1.0% to 21,082.13, while the China Enterprises Index lost 1.1%, to 7,267.57 points. Tech giants listed in Hong Kong declined 0.8%, with e-commerce giant Alibaba down 2.4%.

Tokyo’s benchmark Nikkei 225 index dropped 0.16%, or 44.01 points to end at 27,413.88, its lowest close since November 2020.

On the mainland, China’s blue-chip CSI300 index rose 0.2% to 4,089.57, while the Shanghai Composite Index gained 0.4% to 3,195.46 points.

China’s cabinet announced a package of 33 measures covering fiscal, financial, investment and industrial policies on Tuesday to revive its pandemic-ravaged economy.

Shanghai has since sprung back to life after the financial hub lifted most anti-Covid curbs, but worries over a rebound of cases and the impact of the zero-Covid policy linger.

“Due to still-elevated Covid-related uncertainty, we see big downside risks to our current annual GDP growth forecast of 3.9% for 2022,” Nomura said in a note.

China’s electric vehicle startups reported stronger sales for May and forecast continued gains for June as supply chains and output begin to recover from the disruption of Covid lockdowns.

Indian stocks gained with Mumbai’s signature Nifty 50 index up 0.66%, or 109.30 points, at 16,632.05.


Oil Prices Dip on Saudi Boost

Globally, shares were largely steady after recent weakness as a drop in oil prices on bets Saudi Arabia may boost production helped balance concerns over surging inflation and monetary policy tightening.

The MSCI’s benchmark for global stocks was 0.05% lower by 0816 GMT, helped by morning gains in Europe which almost offset earlier drops in Asia.

Derivative markets pointed to a positive start later in the United States following losses on Wednesday when economic data failed to ease angst over rate hikes to fight inflation. 

Crude oil fell as much as 3% ahead of an OPEC+ producers’ meeting later in the day, and after the Financial Times reported the Saudis were prepared to raise production if Russia’s output falls substantially because of Western sanctions.

“None of that will alleviate the refining bottleneck/crunch that is causing petrol and diesel prices to soar globally, but it would be a rare piece of good news for the global economy and the inflation fight,” OANDA analyst Jeffrey Halley said.

“It certainly isn’t in OPEC’s interests to send the world into a recession,” he added.


Dollar Index Drops

Two OPEC+ sources said the organisation was working on making up for a drop in Russian oil output which has fallen by around 1 million barrels per day as a result of Western sanctions on Moscow over Ukraine.    

The pan-European STOXX 600 index was 0.4% higher, although volumes were expected to be subdued as London markets were shut for Queen Elizabeth’s Platinum Jubilee bank holidays. 

In the United States, S&P 500 and Nasdaq e-mini futures were up 0.3% and 0.5% respectively.

Global benchmark Brent crude oil declined 2.1% to $113.8 per barrel ahead of the OPEC+ meeting and US crude prices fell 2.5% to $112.75. 

The dollar index fell 0.3% to 102.24, reversing part of Wednesday’s gains. That helped the euro climb 0.4% to $1.069, following two days of losses.


Key figures

Tokyo – Nikkei 225 > DOWN 0.16% at 27,413.88 (close)

Hong Kong – Hang Seng Index > DOWN 1.00% at 21,082.13 (close)

Shanghai – Composite > UP 0.42% at 3,195.46 (close)

New York – Dow > DOWN 0.54% at 32,813.23 (Wednesday 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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