Asian markets mixed as S&P 500 nears bear market, Biden set to unveil new Indo-Pacific trade deal
Stocks in Asia were mixed on Monday in cautious trading after Wall Street slipped to the edge of a bear market on Friday.
Investors were waiting for the minutes of the Federal Reserve’s latest policy-setting meeting and consumer price updates, scheduled for later this week.
On Friday, the S&P 500 was down more than 20% from its peak early this year before buying late in the day gave it a negligible gain. It finished 18.7% below the benchmark. This capped the seventh consecutive week of losses, the longest since 2001, when the dotcom bubble was deflation.
Inflation, rising interest rates, the war in Ukraine, and a slowing Chinese economy are all punishing stocks and raising fears of a possible recession in the United States.
Nikkei 225 NIK Index,
In Tokyo gain 0.5%. President Joe Biden’s visit to Japan and South Korea was to launch a US initiative on economic cooperation and security.
The White House, called the Indo-Pacific Economic Framework, said it would help the United States and Asian economies work closely on issues including supply chains, digital trade, clean energy, labor protection and anti-corruption efforts.
However, details still need to be negotiated among member states, making it unclear how the framework can help US workers and companies while also serving the interests of partner countries.
Hong Kong’s Hang Seng Index HSI,
It lost 1.3% while the Shanghai Composite Index SHCOMP lost,
It decreased by 0.4%. Taiwan shares rose Y9999,
But it fell in Singapore STI,
and Indonesia JAKIDX,
Kospi in South Korea 180721,
Unchanged, while the Australian S&P / ASX 200 XJO,
It rose 0.1%. Australia’s centre-left opposition party on Saturday ousted the Conservative government after nearly a decade in power.
Anthony Albanese was sworn in as Prime Minister after his Labor Party won its first electoral victory since 2007. Labor has promised more financial assistance and a strong social safety net as Australia grapples with the highest inflation since 2001 and rising house prices.
But analysts said that the political position of the newly elected administration is not much different from that of the current government and no major changes were expected.
“Although Labor is likely to represent a slightly more fiscally supportive government than their predecessors, we don’t see many impacts on financial markets from the outcome of this election,” economists at ING Economics said in a commentary.
Friday, S&P 500 SPX,
It ended the day 0.57 points higher at 3901.36 points. Dow Jones Industrial Average DJIA,
It rose less than 0.1%, to 3,1261.90. Nasdaq Composite,
It pared a big loss to end down 0.3% at 11354.62.
Many big tech stocks, seen as some of the most vulnerable to higher interest rates, have already fallen more than 20% this year. This includes a 37.2% decline for the Tesla TSLA,
and a 69.1% drop for Netflix NFLX,
It’s a sharp turnaround from the strong race Wall Street enjoyed after breaking out of its last bear market in early 2020, at the start of the pandemic.
With inflation at its highest level in four decades, the Fed has shifted from keeping interest rates very low to supporting markets and the economy, raising rates and taking other steps to curb inflation. The concern is that it may go too far or too fast.
Economists at Goldman Sachs recently put the probability of a US recession in the next two years at 35%.
Inflation has been painfully high for months. But market fears escalated after the Russian invasion of Ukraine, which sent prices up at grocery stores and at petrol pumps, as the region is a major source of energy and grain.
Adding pressure to stocks are signs of slowing corporate earnings and may finally suffer from inflation.
In other transactions, the US crude oil benchmark CLN22,
It added 47 cents to $110.75 a barrel in electronic trading on the New York Mercantile Exchange. It rose 39 cents to $110.28 on Friday.
BRNN22 Brent crude,
Used as a basis for pricing international trade, it rose 67 cents to $113.22 a barrel.
US dollar USDJPY,
It slipped to 127.29 yen from 127.87 yen late Friday.