Asian investors struggled on Thursday to maintain the momentum of the previous day’s stock rally and keep up with another Wall Street surge as growth fears continue to plague stock markets and weigh on risk sentiment.
While last week’s data suggested US consumer resilience appeared to be holding up despite rising inflation and rising interest rates, a closely watched oil stocks report suggested that elevated prices were keeping motorists off the road.
The figures highlighted the choppy landscape retailers must navigate as the global economy is rocked by a slew of issues, including the Ukraine war, an energy crisis and China’s slowdown and supply chain crunch.
And while corporate earnings have provided some much-needed relief so far, analysts remain cautious on the near-term outlook.
The focus is now on events in Europe, where the European Central Bank is set to hike rates for the first time in more than a decade, with most observers expecting a quarter-point hike and some speculating a half-point move.
But officials are walking a tightrope as they try to tame blistering inflation without throwing the economy over a cliff, all amid an energy crisis sparked by Russia’s invasion of Ukraine.
Add to this a new political crisis in Italy that could lead to the fall of Prime Minister Mario Draghi, causing months of uncertainty.
Europe is also awaiting the return of Russian gas supplies after 10 days of maintenance, with many fearing Moscow will keep taps partially or fully shut – hammering the economy – in retaliation for sanctions imposed over its invasion of Ukraine.
Vladimir Putin said the Nord Stream 1 pipeline would be turned back on, but added that they would be limited unless a dispute over some elements of the sanctions was resolved.
– Energy as a weapon –
Western leaders remain cynical about his plans ahead of the northern hemisphere winter.
“Moscow is not afraid to use grain and energy supplies as a weapon,” said Federal Chancellor Olaf Scholz this week, referring to allegations that Moscow had also deliberately blocked food exports from Ukraine.
The IMF warned on Wednesday that a supply freeze could cut 2022 GDP by 1.5 percent.
The European Commission has urged EU members to cut demand for natural gas by 15 percent over the winter to counter Russia’s “blackmail”.
Uncertainty returned to stock markets after Asian markets rallied on Wednesday.
Hong Kong, Shanghai, Tokyo, Sydney, Singapore and Jakarta all fell, although Seoul, Taipei and Manila posted gains.
There was little reaction to Joe Biden’s comments that he would hold talks with Xi Jinping “within the next 10 days” as he decides whether or not to lift some Trump-era tariffs on Chinese goods.
And NewEdge Wealth’s Cameron Dawson said recent gains could not yet be taken as a sign of recovery.
He warned that many stocks are “still in very significant downtrends, so you can see a rally from maybe oversold levels, but unless you really bounce back and break into a better uptrend, it really remains to be seen if that.” can stop”. .
“So it’s more of a relief at this point and not necessarily a turnaround.”
Oil markets extended Wednesday’s decline – with WTI below $100 – after data showed US inventories rose more-than-expected last week as Americans opted not to pay for expensive gasoline.
The numbers come despite being at the peak of the high-demand summer driving season.
– Key figures at 0230 GMT –
Tokyo – Nikkei 225: down 0.1 percent at 27,657.53 (breakout)
Hong Kong – Hang Seng Index: down 1.2 percent at 20,644.13
Shanghai – Composite: down 0.5 percent at 3,288.51
Euro/Dollar: DOWN at $1.0208 from $1.0175 on Wednesday
Pound/dollar: DOWN at $1.1986 from $1.1975
Euro/Pound: DOWN at 85.16p from 84.96p
Dollar/Yen: DOWN at 138.30 yen from 138.26 yen
West Texas Intermediate: FALSE, up 0.9 percent to $99.00 a barrel
North Sea Brent Crude: FALSE, up 0.8 percent at $106.10 a barrel
New York – Dow: up 0.2 percent at 31,874.84 (close)
London – FTSE 100: down 0.4 percent at 7,267.97 (close)
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