On Friday, many Asian stock markets were quiet, and the US dollar held onto its profits from safe-haven trades after weak economic data from the U.S. and China heightened worries about a worldwide downturn. However, Japanese equities performed better.
A deluge of Chinese data that suggested a slow economic recovery following the lifting of COVID restrictions caused MSCI’s broadest index of Asia-Pacific shares outside of Japan (.MIAPJ0000PUS) to slide 0.2% and was on track for a weekly slump of 0.8%.
However, Nissan (7201.T) & Honda (7267.T) reported good earnings, helping Japan’s Nikkei (.N225) rise 0.8% to its highest level since perhaps November 2021. The S&P 500 futures were up 0.2% whilst the Nasdaq futures increased by 0.3%.
China’s bluechips (.CSI300) declined 0.1% in early trade, yet Hong Kong stocks (.HSI) managed a meagre 0.2% gain thanks to an 8% increase in the e-commerce behemoth JD.com (9618.HK) on the strength of its earnings beat and new leadership.
China’s economic recovery appears to be stalling, as seen by the sharp decline in newer bank loans in April, the weakest rate of consumer price growth in more than two years, and the unexpected contraction of imports, which caused a sharp drop in the price of commodities such as copper, iron ore, and more so in oil.
In addition, data revealed that producer prices peaked at the weakest annual gain in more than 2 years last week as U.S. unemployment claims increased to a 1-1/2-year high, suggesting at a potentially more abrupt deceleration in the most-huge economy in the world.
The information strengthened the likelihood that the Federal Reserve will almost certainly stop raising interest rates at its policy meeting in June, and futures markets have continued to reflect rate reductions of approximately 78 basis points by the close of the year.
Shane Oliver, a chief economist at AMP in Sydney, noted the slower global growth and resurgence of bank worries as creating a rather chaotic backdrop for the stock and investment markets.
The good news is that, despite the Bank of England’s continued rate hikes, inflationary pressures are decreasing, relieving pressure on central banks.
Overnight, concerns about banking spread.
After reporting that deposits had decreased by 9.5% the previous week, PacWest (PACW.O) once again led falls in regional banks with a strong 23% overnight drop.
After the Federal Deposit Insurance Corporation (FDIC) of the United States announced that large lenders would be responsible for paying for the replenishment of its deposit insurance fund due to previous bank failures, shares of large banks in the United States fell as well.
Due to the release of additional artificial intelligence technologies, Alphabet Inc. (GOOGL.O) saw a 4.3% increase, which dragged the Dow (.DJI) lower. However, the Nasdaq (.IXIC) increased by 0.2%.
There is ongoing ambiguity about lifting the US debt ceiling.
The IMF has issued a caution that a U.S. default would have catastrophic effects on the U.S. economy, forcing the postponement of a gathering between present U.S. President Joe Biden and several key lawmakers originally slated for this Friday.
The U.S. dollar took advantage from flows into the haven assets amid concerns about global growth and the state of the financial system, maintaining its 0.6% overnight rise at 102.05 against a tin of currencies.
At 6.948 to the greenback, the Chinese yuan was hovering near its two-month low, and the British pound was losing ground towards a one-week trough of $1.2515.
Following longer-lasting yields’ overnight decline on weaker data, Treasury yields were marginally lower in Asia. Standard 10-year note yields were down 2 basis points at 3.373%, whilst two-year yields were down 3 bps at 3.876%.
By increasing its benchmark interest rate by 0.25% to 4.50% on Thursday, the Bank of England kept to its predetermined course.
Despite this, it committed to “stay the course” in order to reduce the highest inflation of any significant, major economy.
After suffering a blow from China, oil was nursing its wounds.
The price of U.S. oil futures increased by 0.1% to $70.96 a barrel, while the price of Brent crude remained stable at $74.97 per barrel.
At $2012.12 an ounce, gold costs were down 0.2%.
