Markets were combined Wednesday, with the little signal of any alleviation from the latest dour performances as buyers remain frightened approximately the monetary outlook thanks to the impact of inflation, higher interest costs, China’s slowdown, and the Ukraine war.
A collection of vulnerable indicators around the arena and downbeat forecasts from huge firms have chilled trading floors in recent weeks as the surge in prices starts to drag on customer confidence, with warnings now swirling of a possible global recession.
The tech sector was again in the firing line after Snap, the parent of social media app Snapchat, provided a gloomy economic outlook, sending its shares diving more than 40 percent.
Wall Street titans followed Snap down, with Facebook-parent Meta and Google-parent Alphabet tanking.
The mood was not helped by news that US new home sales tanked in April while the Richmond Fed manufacturing index also fell, with both at the lowest levels since the coronavirus pandemic began in 2020.
“The market is moving its focus — and has been for the last month or so — from inflation concerns to growth concerns,” said Ellen Hazen of FL Putnam.
Hong Kong, Shanghai, Sydney, Seoul, Taipei, Manila, and Bangkok rose, while Tokyo, Mumbai, Singapore, Jakarta, and Wellington fell.
London, Paris, and Frankfurt rose after tanking on Tuesday.
Investors are now awaiting the Fed’s next move on interest rates, with expectations for more half-point hikes to come as officials struggle to bring inflation down from four-decade highs.
There was a little hope after one policymaker, Atlanta Fed chief Raphael Bostic, suggested a break in the increases in September could make sense as the bank tries to avert a recession.
National Australia Bank’s Tapas Strickland said that, while it was not clear that the Fed was close to being more supportive of markets, “it is clear that growth headwinds are becoming more evident in the data, particularly stemming from the profit reporting season”.
“The Fed of course remains focused on inflation, but if inflation reads were to start to moderate, then Bostic has opened up the possibility of a Fed pause.”
Minutes from the Fed’s most recent policy meeting are due later in the day and will be closely watched for an idea about its plans.
Meanwhile, China continues to conflict with the quick-spreading Omicron coronavirus version, with leaders sticking to their zero-Covid strategy in spite of the dire effect on the financial system of lockdowns.
And without an easing of that coverage in sight, observers warned that a chain of recent support measures could not be sufficient to boost optimism.
“Fiscal multipliers will be minimal in an economy where economic interaction and activity have slowed sharply,” said Stephen Innes of SPI Asset Management.
“Moving beyond mobility restrictions in short order is a pre-condition, but not a guarantee, for an Asia-led economic recovery.”
Tokyo – Nikkei 225: DOWN 0.3 percent at 26,677.80 (close)
Hong Kong – Hang Seng Index: UP 0.5 percent at 20,201.89
Shanghai – Composite: UP 1.2 percent at 3,107.46 (close)
London – FTSE 100: UP 0.6 percent at 7,525.38
Euro/dollar: DOWN at $1.0687 from $1.0739 on Tuesday
Pound/dollar: UP at $1.2542 from $1.2535
Euro/pound: DOWN at 85.20 pence from 85.64 pence
Dollar/yen: UP at 127.08 yen from 126.86 yen
Brent North Sea crude: UP 0.8 percent at $114.49 per barrel
West Texas Intermediate: UP 0.8 percent at $110.65 per barrel
New York – Dow: UP 0.2 percent at 31,928.62 (close)
