Source: AFP
Stocks fell on Wednesday after a mixed day on Wall Street, as worries about the world’s two largest economies offset optimism that the Federal Reserve will begin cutting interest rates next week.
Meanwhile, the yen hit a nine-month high after a Bank of Japan official said policymakers would stick to their plan to tighten if the economy and inflation performed as expected.
Nervous traders also sought a position ahead of key U.S. inflation data that could play a role in the central bank’s decision-making next week, while oil rose after Tuesday’s plunge fueled by demand fears.
Another round of downbeat U.S. jobs data last week reignited concerns that the world’s top economy slowed more than expected and could be heading for a recession.
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They came a month after a rout in stocks caused by an equally poor reading on the labor market and added to the debate over whether the Fed waited too long to cut rates because of its focus on reducing inflation.
Investor uncertainty about the United States is compounded by the ongoing struggles of the Chinese economy as leaders there try to jump-start growth in the face of a crisis in the massive real estate sector, weak consumer activity and soaring youth unemployment.
Long-term problems in the economy and recent government crackdowns on various industries have hammered the mainland and Hong Kong stock markets, which have underperformed in recent years.
And they fell again on Wednesday along with most other markets in the region.
Tokyo, Sydney, Seoul, Wellington and Manila were also in the red, although Singapore, Taipei and Jakarta rose slightly.
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The focus now is on the release of the US consumer price index later in the day, hoping for insight into the Fed’s next move when it concludes its next meeting on September 18 and what it could mean for the economy.
“Investors have turned their eyes to the burning question,” said independent analyst Stephen Innes.
“Smooth Landing or Full Recession? Will the Federal Reserve’s easing cycle be a smooth, controlled descent, or are we headed for a fast and furious panic-induced acceleration?”
“There’s still a school of thought that (Fed boss Jerome) Powell might grab his monetary hat and do a surprise 50 basis point cut. It upends the whole narrative.
“Hold up because this high-stakes game isn’t over yet.”
In currency markets, the yen strengthened to 141.51 at one point — its best level since January — after BoJ board member Junko Nakagawa said officials were determined to continue tightening policy.
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The bank’s surprise decision in July to hike for the second time in 17 years was a factor in the sell-off in global markets days later, as the yen surged and investors unleashed so-called carry trades in which they used the cheap currency to buy high yielding assets such as stocks.
Oil prices rose after falling on Tuesday, when Brent fell below $70 a barrel for the first time since December 2021 on worries about the global outlook and after the OPEC oil cartel revised down estimates of for demand.
Commentators said it offset expectations of a US interest rate cut and OPEC’s decision to hold back on production increases.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 0.8 percent at 35,867.33 (break)
Hong Kong – Hang Seng Index: Down 1.1 percent to 17,050.95
Shanghai Composite: DOWN 0.7 percent at 2,724.85
Dollar/yen: DOWN at 141.75 yen from 142.44 yen on Tuesday
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EUR/USD: UP at $1.1040 from $1.1023
GBP/USD: UP at $1.3095 from $1.3083
Euro/pound: UP at 84.31 pence from 84.25 pence
West Texas Intermediate: UP 0.6% to $66.15 a barrel (close)
North Sea Brent crude: UP 0.5 percent at $69.56 a barrel (close)
New York – Dow: DOWN 0.2 percent at 40,736.96 (close)
London – FTSE 100: Down 0.8% to 8,205.98 (close)
Source: AFP
