Asian markets fell after a mixed week as China worries the Federal Reserve’s rate hike may conflict with signs of a recession
Asian markets were mixed on Friday to end a week of calm in hopes the Federal Reserve will wind down its monetary tightening campaign amid fresh lockdown fears as the number of Covid-19 cases surged in China.
With Wall Street closed for the Thanksgiving break, trading was light with few catalysts for action on the trading floor and investors are now anticipating the release of US jobs numbers next week.
Market sentiment soared this month after the Fed hiked rates and a range of indicators suggested the world’s top economy was showing signs of weakness.
The standout report was consumer and wholesale inflation, which came in much lower than forecast and provided room for the central bank to reverse its doldrums.
And while a selection of Fed officials were quick to warn that more tightening was coming, it is hoped that the days of a 75 basis point bumper increase are over.
That eased some concerns that a sharp rise in borrowing costs could push the US economy into recession, though many observers still see a contraction.
However, Asian equities struggled to end the week on a positive note, with Tokyo, Hong Kong, Singapore, Seoul, Manila and Jakarta all down. There were gains in Shanghai, Sydney, Wellington and Taipei.
Regional sentiment was rocked by lingering fears of a surge in Covid cases in China, which authorities are trying to contain with a range of measures targeting major cities, including Beijing and Shanghai, though they lack a full lockdown.
Still, Stephen Innes of SPI Asset Management said there appears to be less concern about the government’s response as parts of its strict Covid-zero strategy ease.
“Investors are assuming that the increase in cases is normal as China’s economy begins its long and winding road to normalcy,” he said in a comment.
“So investors in the stock and currency market view the current lockdown regime as provisional, betting on the more optimistic interpretation that China will reach the ‘Covid zero’ threshold and that authorities’ efforts to ease restrictions will be continued.”
Tokyo – Nikkei 225: 0.3 percent lower at 28,286.94 (pause)
Hong Kong – Hang Seng Index: 1.3 percent lower at 17,435.15
SHANGHAI – Composite: 0.3 percent higher at 3,097.12
EUR/DOLLAR: Up from $1.0411 to $1.0415 on Thursday
Dollar/yen: up to 138.75 yen from 138.39 yen
Pound/dollar: down from $1.2131 to $1.2100
Euro/Pound: up from 85.82 pence to 86.02 pence
West Texas Intermediate: Up 0.4 percent at $78.26 a barrel
North Sea Brent: Up 0.1 percent to $85.46 a barrel
New York – Dow: Closed for the holidays
LONDON – FTSE 100: Flat at 7,466.60 (close)