Asian markets fall as recession risks remain high

People walk past a screen displaying the Hang Seng stock index outside the Hong Kong stock exchanges in Hong Kong, China July 19, 2022. REUTERS/Lam Yik/File Photo

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HONG KONG, Sept 16 (Reuters) – Asian markets sold off sharply on Friday and Europe looked poised to follow as investors braced for a sharp U.S. rate hike next week amid growing fears of a global recession following warnings from the World Bank and the International Monetary Bank. Funds.

MSCI’s broadest non-Japan Asia-Pacific equity index (.MIAPJ0000PUS) opened in negative territory on Friday and sold off during the day.

It was last down 1.1% after US stocks ended the previous session with slight losses.

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In the region, Australian shares (.AXJO) were down 1.34% on Friday, while the Japanese Nikkei stock index (.N225) fell 1%.

Hong Kong’s Hang Seng Index (.HSI) fell 1.1% while China’s CSI300 Index (.CSI300) fell 0.86%.

“There is pain in equity markets and we are entering a phase where there will be further sell-offs because rates are going to stay higher for longer,” said Suresh Tantia, senior investment strategist at Credit Suisse.

“A strong US dollar does not help Asian markets and it will be even more negative for stock markets in this region.”

The dollar lost 0.14% against the yen at 142.95, after losing 0.4% earlier in the session. .

Japan’s monetary intervention threats could slow but not prevent the yen from hurtling to three-decade lows before the end of the year, market analysts and fund managers said. Read more

The euro was down 0.1% on the day at $0.9987, having lost 0.51% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 109.83.

The Chinese yuan weakened beyond the psychologically important 7 to 1 US dollar level for the first time in two years.

In European early trades, pan-regional Euro Stoxx 50 futures were down 0.76% at 3,517, German DAX futures were down 0.93% at 12,849, FTSE futures were down 0.61% to 7,247.5.

US equity futures, the S&P 500 e-minis, fell 0.7% to 3,874.8.

The global economic outlook remains gloomy and some countries are expected to slide into recession in 2023, but it is too early to tell whether there will be a widespread global recession, the IMF said on Thursday. Read more

In July, the IMF revised global growth down to 3.2% in 2022 and 2.9% in 2023. It will release a new outlook next month.

By comparison, the World Bank has said the world could be heading for a global recession in 2023 as central banks around the world simultaneously raise interest rates to combat persistent inflation. Read more

The world’s three largest economies – the United States, China and the eurozone – have slowed sharply, and even “a moderate hit to the global economy over the next year could tip it into recession” , did he declare.

In China, Friday’s data showed surprising resilience in August, with faster-than-expected growth in manufacturing output and retail sales supporting a fragile recovery, but the deepening housing crisis and slowing exports are weighing. on the outlook. Read more

Despite the top readings, investors are still focused on China’s pursuit of a zero-COVID strategy, which nearly pushed the economy into contraction in the second quarter.

“China’s short-term economic activity depends on its COVID policies, how they handle it. With a more pragmatic approach, the market expects there to be more confidence which would inject more optimism in the market,” said Marcella Chow, global market strategist at JPMorgan Asset Management.

In Asian trading, the yield on benchmark 10-year Treasuries stood at 3.4533% from its US close of 3.459% on Thursday.

The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 3.8925% from a US close of 3.873.

Those yields hit a new 15-year high after mixed U.S. retail sales and jobless claims data, which analysts said bolstered the case for aggressive Reserve rate hikes. federal.

Markets are currently fully pricing in a 75 basis point rate hike next week, economists said.

U.S. crude rose 0.31% to $85.36 a barrel. Brent crude hit $91.24 a barrel.

Gold was slightly lower. Spot gold was trading at $1662.49 an ounce.

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Editing by Ana Nicolaci da Costa and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

scott murdoch

Thomson Reuters

Scott Murdoch has been a journalist for over two decades and works for Thomson Reuters and News Corp in Australia. He has specialized in financial journalism for most of his career and covers equity and debt markets across Asia from Hong Kong.

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