Global Courant 2023-04-13 12:12:46
BEIJING — Asian stock markets fell Thursday after the Federal Reserve said its economists expect a “mild recession” this year.
Shanghai, Hong Kong, Seoul and Sydney withdrew. Tokyo advanced. Oil prices fell.
Wall Street closed lower on Wednesday after notes from the central bank’s latest meeting said economists expect lower bank lending to trigger a “mild recession.” Traders have already seen an increasing likelihood of at least a brief recession in the US this year as interest rates rise to cool inflation. Government data showed that consumer prices rose 5% in March, well above the Fed’s 2% target.
“It seems to sow recession fears that have shaken risk sentiment,” IG’s Yeap Jun Rong said in a report. The Fed report “erods chatter about a soft landing scenario”.
The Shanghai Composite Index lost 0.4% to 3,312.79 while Tokyo’s Nikkei 225 added 0.2% to 28,140.27. The Hang Seng in Hong Kong fell 0.7% to 20,160.84.
The Seoul Kospi fell 0.1% to 2,548.61 while the Sydney’s S&P ASX fell 0.4% to 7,313.90.
The Indian Sensex opened 0.4% lower at 60,149.89. New Zealand and Singapore advanced while Jakarta retreated.
Traders have been concerned that the Fed and other central banks in Europe and Asia could push the global economy into recession as they try to quench inflation near multi-decade highs.
That fear was briefly overruled by fears for the health of banks worldwide after two high-profile bankruptcies in the United States and one in Switzerland. But regulators appear to have addressed those concerns by promising more loans and taking other steps to stabilize banks if necessary.
On Wall Street, the benchmark S&P 500 index fell 16.99, or 0.4%, to 4,091.95. About 65% of the stocks within the index fell.
The Dow Jones Industrial Average fell 38.29, or 0.1%, to 33,646.50. The Nasdaq composite lost 102.54, or 0.9%, to 11,929.34.
Traders are still largely betting that the Fed will raise short-term rates by another quarter of a percentage point at its next meeting, according to data from CME Group. They have shaded some bets on the possibility that the Fed will just hold rates steady in May, something it hasn’t done in over a year.
Traders have placed bets that the Fed will have to cut rates later this year to support the economy.
The bond market is showing nervousness about a possible recession. The yield on 10-year government bonds fell from 3.43% late Tuesday to 3.41%. Two-year government bond yields, which move more than expected for the Fed, fell from 4.03% to 3.96%.
Investors look forward to the latest quarterly earnings reports that US companies will release this week.
Expectations are low. Analysts are predicting the worst fall in S&P 500 earnings per share since the pandemic crushed the economy in 2020. But many also expect this to be the low point and are calling for a return to growth later this year.
In the energy markets, benchmark US crude lost 32 cents to $82.94 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.73 to $83.26 on Wednesday. Brent crude, the price base for international oil trade, fell 40 cents to $86.93 a barrel in London. It was up $1.72 from the previous session to $87.33.
The dollar rose to 133.35 yen from 133.19 yen on Wednesday. The dollar fell from $1.0995 to $1.0986.
