Asian markets mixed as S&P 500 nears bear market, Biden prepares to unveil new Indo-Pacific trade pact

Stocks were mixed in Asia on Monday in cautious trading after Wall Street rumbled on the brink of a bear market on Friday.

Investors were awaiting the minutes of the Federal Reserve’s latest monetary policy meeting and updates on consumer prices, due later this week.

On Friday, the S&P 500 fell more than 20% below its high set earlier this year before late-day buying gave it a small gain. He finished 18.7% below his record. That capped a seventh consecutive negative week, the longest since 2001, when the dot-com bubble was deflating.

Inflation and rising interest rates, the war in Ukraine and a slowing Chinese economy are weighing on stocks and raising fears of a possible US recession.

The Nikkei 225 NIK,
+0.98%
in Tokyo it gained 0.5%. President Joe Biden’s visit to Japan and South Korea resulted in the launch of a US initiative on economic cooperation and security.

Called the Indo-Pacific Economic Framework, the White House said it will help the US and Asian economies work more closely on issues including supply chains, digital trade, clean energy, worker protections and anti-corruption efforts.

However, details still need to be negotiated between member countries, so it’s unclear how the framework could help US workers and businesses while serving the interests of partner countries.

Hong Kong HSI Hang Seng Index,
-1.19%
lost 1.3% while the SHCOMP Shanghai Composite Index,
+0.01%
decreased 0.4%. Shares rose in Taiwan Y9999,
+0.07%,
but fell in Singapore STI,
-0.83%
and Indonesia JAKIDX,
-1.12%.

Kospi 180721 from South Korea,
+0.31%
was unchanged, while Australia’s S&P/ASX 200 XJO,
+0.05%
bordered 0.1% higher. Australia’s centre-left opposition party ousted the Conservative government on Saturday after nearly a decade in power.

Anthony Albanese was sworn in as prime minister after his Labor party won its first election victory since 2007. Labor has promised more financial assistance and a strong social safety net as Australia grapples with the highest inflation since 2001 and rising costs. house prices.

But analysts said the newly elected administration’s political stance was not significantly different from that of the incumbent government and no major changes were expected.

“While Labor may represent a government with slightly more fiscal support than its predecessors, we don’t see many implications for financial markets from this election result,” economists at ING Economics said in a note.

On Friday, the S&P 500 SPX,
+0.01%
It ended the day up 0.57 points at 3,901.36. The Dow Jones Industrial Average DJIA,
+0.03%
it rose less than 0.1% to 31,261.90. The Nasdaq Composite COMP,
-0.30%
trimmed a big loss to finish 0.3% lower at 11,354.62.

Many big tech stocks, considered some of the most vulnerable to rising interest rates, are already down well over 20% this year. That includes a 37.2% drop for Tesla TSLA,
-6.42%
and a nosedive of 69.1% for Netflix NFLX,
+1.56%.

It’s a sharp turnaround from the mighty run Wall Street enjoyed after emerging from its last bear market in early 2020, at the start of the pandemic.

With inflation at its highest level in four decades, the Fed has moved from keeping interest rates very low to supporting markets and the economy and is raising rates and taking other steps to rein in inflation. The concern is that it might go too far or too fast.

Goldman Sachs economists recently estimated the probability of a US recession in the next two years to be 35%.

Inflation has been painfully high for months. But market concerns increased after the Russian invasion of Ukraine sent prices higher at grocery stores and gas stations, because the region is a major source of energy and grain.

Adding pressure on stocks are signs that corporate earnings are slowing and may finally be suffering from inflation.

In other transactions, US benchmark crude oil CLN22,
+1.05%
added 47 cents to $110.75 a barrel in electronic trading on the New York Mercantile Exchange. It gained 39 cents at $110.28 on Friday.

Crude Brent BRNN22,
+1.13%,
used as a basis for pricing for international trade, it advanced 67 cents to $113.22 a barrel.

US dollar USDJPY,
-0.33%
it fell to 127.29 Japanese yen from 127.87 yen on Friday night.

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