Image: Reuters Berita 24 English - On Thursday, Asian shares were finishing a challenging quarter in gloom because to concerns that central...
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| Image: Reuters |
Berita 24 English - On Thursday, Asian shares were finishing a challenging quarter in gloom because to concerns that central banks' efforts to fight inflation may instead hurt the world economy, even as they are helping the safe-haven dollar and government bonds.
The scale of the difficulty will be highlighted by data on U.S. core prices later in the day, which will be released after policymakers on Wednesday reaffirmed their commitment to reducing inflation regardless of the suffering it caused.
ANZ analysts cautioned that inflation "may be sticky." The shift from products to services is occurring, and pay growth is quickening.
"Even with swift rate increases, tight labour markets will take time to loosen up, which means inflation can stay higher for longer."
That implies that, despite how far markets have already dropped, it is still too early to predict an interest rate peak or a stock market bottom.
The S&P 500 has underperformed since the pandemic's inception by roughly 16 percent this quarter, while the Nasdaq is down an alarming 21 percent.
S&P 500 futures and Nasdaq futures were also down early on Thursday, with no indication that the upcoming quarter will attract daring bargain seekers.
MSCI's largest index of Asia-Pacific stocks outside of Japan declined by another 0.4 percent, bringing its quarterly losses to 10%.
Due to a weaker yen and the Bank of Japan's steadfast commitment to ultra-easy policies, the Nikkei in Japan sank by 0.8 percent, but its decline this quarter has been a very modest 4 percent.
Data revealing that Japanese industrial output fell by 7.2% in May, when analysts had expected a drop of only 0.3%, highlighted the need for stimulus.
Chinese blue chips increased by 0.6 percent, which was aided by a survey that revealed a noticeable uptick in services activity.
JPMorgan analysts believe that China will experience a significant rebound in the coming months since there has been so much bad news priced into global markets.
The average investor simply anticipates an economic catastrophe, and if that does not occur, risky asset classes might recover the majority of their losses from the first half, they stated in a note. "It is not that we think that the world and economies are in terrific shape," they added.
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U.S. 10-year rates have temporarily dropped to 3.085 percent from their previous top of 3.498 percent due to the recession risk, even though they are still up 77 basis points for the quarter.
While futures are virtually completely priced expecting another Federal Reserve rate hike of 75 basis points in July, the yield curve has continued to flatten and gone negative in the three- to seven-year range.
The aggressive stance of the Fed, coupled with investors' need for liquidity during challenging times, gave the U.S. dollar its strongest quarter since late 2016. A little fraction away from its most recent two-decade peak of 105.79, the dollar index was trading higher at 105.100.
The euro remained weak at $1.0442, down 5.6 percent for the quarter, but still slightly above the low point of May of $1.0348.
The dollar has increased by more than 12 percent this quarter to 136.70, reaching its highest level since 1998, making the Japanese yen even worse off.
Non-yielding gold remained locked at $1,818 per ounce after losing 6% for the quarter due to rising interest rates and a strong currency. [GOL/]
Despite tight global supplies, oil prices were unchanged on Thursday due to worries about an unexpected downturn in U.S. gasoline demand. [O/R]
Despite American pressure to increase quotas, OPEC and OPEC+ conclude their two days of talks on Thursday with little hope of being able to pump much more oil.
While U.S. crude fell 5 cents to $109.73, September Brent increased 2 cents to $112.47 per barrel.
