Image: Reuters Berita 24 English - On Wednesday morning, stocks declined throughout Asia , adding to overnight losses on Wall Street due to...
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| Image: Reuters |
Berita 24 English - On Wednesday morning, stocks declined throughout Asia, adding to overnight losses on Wall Street due to worries about the recession, inflation, and rising oil costs, which also helped the safe-haven dollar.
The MSCI's broadest index of Asia-Pacific equities outside of Japan sank 1.1 percent in early trade, while Australia's shares plummeted 1.29 percent and Korea's KOSPI dropped 1.57 percent. Japan's Nikkei index declined 1.01 percent.
After China announced an easing of its quarantine restrictions for incoming travellers, Asian shares closed the previous session on an uptick, in what some observers described as the biggest relaxation so far of its "zero COVID" plan.
On Wednesday, though, the effect was starting to fade.
According to Carlos Casanova, senior economist at UBP in Hong Kong, "markets always have a tendency to overreact to these kinds of news." "We really want to see these initiatives materialise into actual reopening in order for that to be sustainable," said the group.
While the Hong Kong benchmark slid 1.3 percent, Chinese blue chips, which had reached a four-week high the day before, lost 0.6 percent.
Losses in Asia came after a volatile day on American stock markets, where the S&P 500 index fell more than 2% after data revealed that consumer confidence in the United States fell to a 16-month low in June amid concerns that high inflation could cause the economy to slow significantly in the second half of the year.
Investors flocked to the safe haven dollar as concerns about a possible global recession increased, and the dollar index held steady at 104.4.
Overnight, the euro lost 0.6 percent against the dollar and was trading at $1.0529 in early Asia. The Japanese yen was trading at 136.03 per $1, not far from the 24-year low of 136.7 set last week.
As other central banks tighten their monetary policies, the Bank of Japan maintains a loose monetary policy, which has caused the yen to struggle. BOJ governor Haruhiko Kuroda emphasised this point on Wednesday.
The 10-year U.S. Treasury note yield remained constant at 3.1697 percent.
After three days of advances, oil prices retreated a little, but a lack of supplies around the world supported the market. According to a report from the previous night, Saudi Arabia and the United Arab Emirates won't be able to considerably increase output anytime soon.
Brent crude futures decreased by 0.53 percent to $117.35 per barrel on the day. To $111.39, U.S. crude fell by 0.37 percent.
UBP's Casanova predicted that immediate prices would likely stay high. I don't believe there will be much of a spillover, though, onto other Asian asset classes, with the possible exception of bonds for some nations that are particularly vulnerable to swings in energy prices.
The price of spot gold increased by 0.15 percent to $1,822.48 per ounce.
