Concerns on Inflation and Recession Lowers Asian Stocks
While oil prices fell following reports of manufacturing guarantees from Saudi Arabia, Asian stock markets fell on Thursday as investor concerns about high inflation and the risk of a recession spread.
In Europe, stock prices should rise after the regional index fell in the red for two days. Euro stocks 50 futures rose 0.16%, German DAX futures rose less than 0.1%, but FTSE futures were flat. Global Benchmark Brent crude oil fell about 2% to $ 114.02 a barrel before a meeting of oil producers later that day, which should pave the way for increased output. US crude was also down about 2% to $ 112.97.
Increase in Oil Supply and Declining Prices
The fall in oil prices accelerated after the Financial Times reported that Saudi Arabia was ready to increase oil production in the event of a sharp decline in Russia’s production.
The widest index of MSCI non-Japanese Asia Pacific equities fell 1.4% in the afternoon trading. China’s Best Equity Index fell 0.1%, Australian equities fell 1%, and Seoul’s KOSPI fell 1.1%. In Tokyo, the Nikkei Stock Average fell 0.25%. Investors are worried about uncertainties exacerbated by the pace of rate hikes by the US Federal Reserve; the impact of the Russian-Ukraine war on food and commodity prices; and strict COVID 19 restrictions on China’s supply chain restrictions. There is growing concern about the recession. On Wednesday, May, polls showing stronger-than-expected US manufacturing activity rarely eased those concerns.
Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co (NYSE: JPM), likened the US economy’s challenges to “hurricanes.” Rodrigo Catril, the senior FX strategist at NAB, said the details of the study indicate that price signals are “still in line with very strong inflationary pressures” and negative growth in manufacturing employment. On Thursday, a new survey of South Korean factory activity showed that growth slowed in May; this was due to lower import and export orders. This is the latest indicator of global manufacturing problems. Strong US manufacturing data helped the dollar rise as US stocks rarely rose overnight, but yields surged to a two-week high.
