Image: Reuters Berita 24 English - On Wednesday, investors' worries that the region is pushing the world into recession increased as As...
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| Image: Reuters |
Following a 9.5 percent decline to a 2-1/2 month low on Tuesday amid concerns that a slowdown in global growth may hurt demand, Brent oil futures rose 1.4 percent in morning trade to $104.18 a barrel.
Outside of Japan, the MSCI index of stocks in Asia-Pacific decreased by 0.6%. The Nikkei index of Japan decreased by 0.88 percent, on pace to post its first weekly loss. S&P 500 futures decreased by 0.2%, while Euro STOXX 50 futures increased by 1.8%.
Worries over additional COVID-19 cases in Shanghai running the danger of new limitations caused the Chinese blue chips to decline 0.7 percent, dragging down the Hang Seng index in Hong Kong by 0.42 percent.
The STOXX 600 index for Europe fell 2% over night, while the euro fell more than 1.5% to $1.0236, its lowest level since late 2002 as speculators were alarmed by reports of gas restrictions. [
The recession risk is becoming more and more prevalent, according to Jason Teh, chief investment officer at Vertium Asset Management in Sydney.
"Right now, defence is the key to winning. Right now, it's the best course of action because many things can go wrong during a recession."
Gas prices have skyrocketed due to supply-side uncertainty in Europe. Benchmark Since mid-June, gas prices in the Netherlands have doubled; they increased 7% overnight to a four-month high.
Germany's year-ahead baseload electricity reached a record level. Investors are concerned about supply continuity once the Nord Stream pipeline, which transports Russian gas to Germany, shuts down for ten days starting on July 11 for repairs.
After former Russian president Dmitry Medvedev threatened to shut off Japan's oil and gas supplies, shares of commodities trading companies Mitsui & Co. and Mitsubishi Corp. fell more than 5% in Tokyo.
The pound also touched a two-year low, and the latest political crisis to affect Prime Minister Boris Johnson's government—the departure of his finance and health secretaries—raised doubts about his ability to remain in office. After reaching $1.1899 overnight, the exchange rate remained steady in Asia at $1.1964.
Support could be provided by rumours of a leadership change, but this is strongly weighed down by an economic outlook that a new leader is unlikely to change. According to Societe Generale strategist Kit Juckes, "The UK is in risk of being the slowest-growing major advanced economy next year, with the highest inflation rate and the biggest current account deficit." "That's a sizable collection, and it clearly poses a risk to the pound."
The risk-sensitive currencies of Australia and New Zealand were held near two-year lows by the dollar, and spot gold prices fell to their lowest levels this year. The Australian dollar last traded at $0.6810 after falling 1.0 percent over the previous night to a two-year low of $0.6762. [AUD/]
After falling overnight, spot gold was last stable at $1,771 per ounce. Compared to the huge losses for stocks and bonds, safe-haven gold has down about 3% this year.
Investors are now waiting for fresh indications of whether the economy may enter a recession when the US payroll data is released on Friday.
Robert Carnell and Iris Pang from ING stated in a note this morning, "A high payrolls result may temporarily allay recession fears, but it will also undoubtedly increase two-year rates and probably won't be perceived as unequivocally positive by the stock investment community."
The 10-year note's yield on benchmark U.S. treasuries was 2.8218 percent on Wednesday.
With a 2.77 percent decline to trade at $19,855.14, bitcoin has again dropped below the crucial $20,000 barrier.
