Chinese Business

Asian markets were mixed Friday as optimism about China’s economic reopening continues to face off against concerns about rising interest rates and a possible recession.

With few Thursday catalysts to work with, traders were setting their sights on the release of two key US inflation reports — on Friday and Monday — and the Federal Reserve’s final policy meeting of the year.

In light of data signalling almost a year of interest rate hikes was beginning to impact prices, the US central bank is widely expected to announce a 50 basis point lift at the gathering, compared with the previous four straight 75-point increases.

But there remains some concern that the world’s top economy remains resilient and the jobs market too strong, meaning the Fed might have to keep tightening monetary policy longer than had been hoped.

That uncertainty has weighed on US markets, which have endured a tough December so far, and analysts warned of further pain.

“We think the worst is yet to come,” Gary Schlossberg, at Wells Fargo Investment Institute, told Bloomberg Television.

“We’re looking for a moderate recession next year, which means a moderate decline in corporate profits is our target for the year.”

The mood was slightly better in Asia, particularly Hong Kong, where investor sentiment has been buoyed by China’s decision to shift away from its nearly three-year zero-Covid strategy of lockdowns and mass testing that has battered the economy.

After widespread protests across the country, leaders have decided to loosen their grip, fanning excitement that growth will pick up as activity returns to normal.

A pledge to help the embattled property sector, which accounts for a huge part of the economy, was also providing a lift.

“The process will likely be gradual and bumpy over the year ahead, due to low immunisation of the population and unpreparedness of the health system to deal with a possible further surge in cases,” Silvia Dall’Angelo, at Federated Hermes, said in a note.

“Reopening should gain traction in the second half of next year. At that stage, the Chinese recovery will likely accelerate, as the removal of restrictions will allow fiscal and monetary stimulus to be effective.”

And JPMorgan strategist Marko Kolanovic added that he “remains positive on China, due to favorable monetary conditions as well as an eventual full reopening and end of Covid”.

Hong Kong rose in early trade, along with Tokyo, Sydney, Seoul, Singapore and Taipei, though Shanghai, Wellington, Manila and Jakarta edged down.

Oil prices rose after another big drop, with both main contracts down more than 10 percent this week as expectations for a recession in the United States and elsewhere weighed on demand expectations.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.4 percent at 27,946.21 (break)

Hong Kong – Hang Seng Index: UP 0.3 percent at 19,498.04

Shanghai – Composite: DOWN 0.2 percent at 3,189.58

Euro/dollar: UP at $1.0570 from $1.0560 on Thursday

Dollar/yen: DOWN at 136.29 yen from 136.61 yen

Pound/dollar: UP at $1.2255 from $1.2239

Euro/pound: DOWN at 86.22 pence from 86.24 pence

West Texas Intermediate: UP 1.0 percent at $72.16 per barrel

Brent North Sea crude: UP 0.9 percent at $76.82 per barrel

Wall Street stocks staged a relief rally and Hong Kong soared on Thursday, but elsewhere equity trading was held back by recession fears.

Oil prices, meanwhile, added to recent sharp losses.

Equity markets had been rising ahead of US jobs figures last week, boosted by a surprise drop in inflation and comments from Federal Reserve boss Jerome Powell that the bank was likely to raise rates at a slower pace.

But robust jobs figures and a jump in wages, plus data on Monday showing a forecast-busting jump in activity in the US services sector last month, raised the prospect that the Fed will not back down from sharp rate increases when it meets next week.

That sent stocks slumping, with even China’s relaxing of Covid testing and quarantine restrictions, setting up the prospect of a rebound in activity in the world’s second-largest economy, unable to turn sentiment.

Following several days of losses, Wall Street moved higher on Thursday, with the Dow up 0.6 percent in late morning trading.

“What we have today, then, is a little rebound spirit — an assumption that the stock market is due for a bounce after behaving so poorly in more recent action…” said market analyst Patrick O’Hare at Briefing.com.

European stocks spent the afternoon wobbling between gains and losses. Frankfurt ended the day flat, while London and Paris shed 0.2 percent.

“The risk-off sentiment… remains hard to kick into touch as concerns about recession stay front and centre,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The evil twins of recession and persistently higher inflation are lurking, keeping investors on edge.”

Analysts pointed out that two-year US Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming recession.

This week also saw the heads of some of Wall Street’s biggest banks warn of a downturn.

– China Covid shift –

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of lockdowns and mass testing.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many of them and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index closed up more than three percent Thursday.

“Developments in China have a big role to play, although as we’re seeing once again, Covid-related moves are almost exclusively impacting stocks in domestic markets,” said Craig Erlam, senior analyst at OANDA trading group. 

“We can see that again overnight, with reports of looser mask and isolation requirements in Hong Kong lifting the Hang Seng and making it the clear outperformer in the region, while most other indices tread water.”

Joshua Mahony, senior market analyst at online trading platform IG, said “to a large extent this week highlights how traders have to somehow weigh up the benefits of a gradual Chinese reopening with the fears of an impending economic contraction in the year ahead.”

– Key figures around 1630 GMT –

New York – Dow: UP 0.6 percent at 33,799.15 points

EURO STOXX 50: FLAT at 3,921.27

London – FTSE 100: DOWN 0.2 percent at 7,472.17 (close)

Frankfurt – DAX: FLAT at 14,264.56 (close)

Paris – CAC 40: DOWN 0.2 percent at 6,647.31 (close)

Tokyo – Nikkei 225: DOWN 0.4 percent at 27,574.43 (close)

Hong Kong – Hang Seng Index: UP 3.4 percent at 19,450.23 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,197.35 (close)

Euro/dollar: UP at $1.0548 from $1.0510 on Wednesday

Dollar/yen: UP at 136.58 yen from 136.57 yen

Pound/dollar: UP at $1.2221 from $1.2209

Euro/pound: UP at 86.29 pence from 86.05 pence

Brent North Sea crude: DOWN 1.0 percent at $76.38 per barrel

West Texas Intermediate: DOWN 0.4 percent at $71.74 per barrel

Wall Street stocks attempted to stage a relief rally and Hong Kong soared on Thursday, but elsewhere equity trading was still dominated by recession fears.

Oil prices, meanwhile, rebounded slightly from recent sharp losses.

Equity markets had been rising ahead of US jobs figures last week, boosted by a surprise drop in inflation and comments from Federal Reserve boss Jerome Powell that the bank was likely to raise rates at a slower pace.

But robust jobs figures and a jump in wages, plus data on Monday showing a forecast-busting jump in activity in the US services sector last month, raised the prospect that the Fed will not back down from sharp rate increases when it meets next week.

Following several days of losses, Wall Street opened to the upside, with the Dow rising 0.4 percent.

“What we have today, then, is a little rebound spirit — an assumption that the stock market is due for a bounce after behaving so poorly in more recent action…” said market analyst Patrick O’Hare at Briefing.com.

European stocks tried to rally before Wall Street opened, but failed to hold onto gains. London was flat, while both Frankfurt and Paris were down 0.2 percent as trading got underway in New York.

“The risk-off sentiment… remains hard to kick into touch as concerns about recession stay front and centre,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The evil twins of recession and persistently higher inflation are lurking, keeping investors on edge.”

Analysts pointed out that two-year US Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming recession.

This week also saw the heads of some of Wall Street’s biggest banks warn of a downturn.

– China Covid shift –

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of lockdowns and mass testing that has been blamed for clattering the world’s number two economy.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many of them and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index closed up more than three percent Thursday.

“Developments in China have a big role to play, although as we’re seeing once again, Covid-related moves are almost exclusively impacting stocks in domestic markets,” said Craig Erlam, senior analyst at OANDA trading group. 

“We can see that again overnight, with reports of looser mask and isolation requirements in Hong Kong lifting the Hang Seng and making it the clear outperformer in the region, while most other indices tread water.”

– Key figures around 1430 GMT –

New York – Dow: UP 0.4 percent at 33,715.24 points

London – FTSE 100: FLAT at 7,487.53 

Frankfurt – DAX: DOWN 0.2 percent at 14,231.57

Paris – CAC 40: DOWN 0.2 percent at 6,646.81

EURO STOXX 50: DOWN 0.2 percent at 3,913.49

Tokyo – Nikkei 225: DOWN 0.4 percent at 27,574.43 (close)

Hong Kong – Hang Seng Index: UP 3.4 percent at 19,450.23 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,197.35 (close)

Euro/dollar: UP at $1.0531 from $1.0510 on Wednesday

Dollar/yen: UP at 136.62 yen from 136.57 yen

Pound/dollar: UP at $1.2212 from $1.2209

Euro/pound: UP at 86.21 pence from 86.05 pence

Brent North Sea crude: UP 1.6 percent at $78.40 per barrel

West Texas Intermediate: UP 2.8 percent at $74.04 per barrel

Hong Kong soared but other stock markets mostly fell Thursday as investors weighed worries about a US recession against China’s shift away from strict Covid restrictions.

Oil prices rebounded slightly from recent sharp losses.

“The risk-off sentiment… remains hard to kick into touch as concerns about recession stay front and centre,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. 

“The evil twins of recession and persistently higher inflation are lurking, keeping investors on edge.”

Analysts pointed out that two-year US Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming recession.

This week also saw the heads of some of Wall Street’s biggest banks warn of a downturn.

Traders are now steeling themselves for the release next week of crucial inflation figures and the Fed’s final policy meeting of the year, which will be pored over for an idea about its intentions in 2023.

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of lockdowns and mass testing that has been blamed for clattering the world’s number two economy.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many of them and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally across markets, particularly in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index closed up more than three percent Thursday.

“Developments in China have a big role to play, although as we’re seeing once again, Covid-related moves are almost exclusively impacting stocks in domestic markets,” said Craig Erlam, senior analyst at OANDA trading group. 

“We can see that again overnight, with reports of looser mask and isolation requirements in Hong Kong lifting the Hang Seng and making it the clear outperformer in the region, while most other indices tread water.”

– Key figures around 1200 GMT –

London – FTSE 100: FLAT at 7,488.65 points

Frankfurt – DAX: DOWN 0.3 percent at 14,217.20

Paris – CAC 40: DOWN 0.1 percent at 6,650.95

EURO STOXX 50: DOWN 0.2 percent at 3,912.11

Tokyo – Nikkei 225: DOWN 0.4 percent at 27,574.43 (close)

Hong Kong – Hang Seng Index: UP 3.4 percent at 19,450.23 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,197.35 (close)

New York – Dow: FLAT at 33,597.92 (close)

Euro/dollar: UP at $1.0512 from $1.0510 on Wednesday

Dollar/yen: UP at 136.77 yen from 136.57 yen

Pound/dollar: DOWN at $1.2176 from $1.2209

Euro/pound: UP at 86.34 pence from 86.05 pence

Brent North Sea crude: UP 1.0 percent at $77.95 per barrel

West Texas Intermediate: UP 1.0 percent at $72.76 per barrel

Asian and European markets were mixed Thursday as sentiment was pulled in opposite directions by worries about a US recession and China’s shift away from strict Covid restrictions.

A rally across equities at the start of the month has been hobbled this week by growing concerns that the Federal Reserve’s drive to rein inflation back from 40-year highs will spark a downturn and skittle company profits.

The US central bank has ramped up interest rates through 2022, including bumper increases of 75 basis points at its past four meetings.

And while data for October showed inflation appeared to be coming down — lifting hopes the Fed could take its foot off the pedal — forecast-busting figures on jobs creation and services sector activity suggested officials still had work to do to cool prices.

Analysts pointed out that two-year Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming recession.

This week also saw the heads of some of Wall Street’s biggest banks warn of a downturn.

After sinking on Friday and Monday, New York’s three main indexes suffered another disappointing day Tuesday with the S&P 500 down for a fifth straight day and the Dow the best performer after ending barely changed.

The losses continued in Asia with Tokyo, Sydney, Seoul, Taipei, Bangkok and Jakarta all in the red.

Traders are now steeling themselves for the release next week of crucial inflation figures and the Fed’s final policy meeting of the year, which will be pored over for an idea about its intentions for 2023.

– Good news, bad news –

“The good news is that the market sees more than a reasonable chance of the Fed reversing gears next year, mainly in response to a downturn,” said Stephen Innes at SPI Asset Management.

“But the bad news is we are likely to fall into recession thanks in no small part to the lagged impact of the most aggressive Fed tightening campaign since (former Fed boss) Paul Volcker” in the 1980s.

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of lockdowns and mass testing that has been blamed for clattering the world’s number two economy.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many of them and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally across markets, particularly in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index has soared more than 30 percent since the end of October, and while it stumbled Wednesday, it rose more than three percent Thursday helped by reports leaders were planning to further ease Covid rules in the city.

There were also gains in Singapore, Mumbai and Wellington, but Shanghai ended slightly lower.

London dipped at the open but Paris and Frankfurt rose.

On oil markets both main contracts bounced after suffering hefty selling over the previous four days as demand concerns caused by a possible recession offset China’s reopening.

A jump in US gasoline stockpiles added to the downbeat mood among traders, with WTI sitting at its lowest levels of the year and Brent at its weakest since January.

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: DOWN 0.4 percent at 27,574.43 (close)

Hong Kong – Hang Seng Index: UP 3.4 percent at 19,450.23 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,197.35 (close)

London – FTSE 100: DOWN 0.2 percent at 7,477.55

Euro/dollar: UP at $1.0522 from $1.0510 on Wednesday

Dollar/yen: UP at 136.78 yen from 136.57 yen

Pound/dollar: DOWN at $1.2200 from $1.2209

Euro/pound: UP at 86.23 pence from 86.05 pence

West Texas Intermediate: UP 0.8 percent at $72.60 per barrel

Brent North Sea crude: UP 0.7 percent at $77.70 per barrel

New York – Dow: FLAT at 33,597.92 (close)

Asian markets were mixed Thursday as sentiment was pulled in opposite directions by worries about a US recession and China’s shift away from strict Covid restrictions.

A rally across equities at the start of the month has been hobbled this week by growing concerns that the Federal Reserve’s drive to rein inflation back from 40-year highs will spark a downturn and skittle company profits.

The US central bank has ramped up interest rates through 2022, including bumper increases of 75 basis points at its past four meetings.

And while data for October showed inflation appeared to be coming down — lifting hopes the Fed could take its foot off the pedal — forecast-busting figures on jobs creation and services sector activity suggested officials still had work to do to cool prices.

Analysts pointed out that two-year Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming recession.

This week also saw the heads of some of Wall Street’s biggest banks warn of a downturn.

After sinking on Friday and Monday, New York’s three main indexes suffered another disappointing day Tuesday with the S&P 500 down for a fifth straight day and the Dow the best performer after ending barely changed.

The losses continued in Asia with Tokyo, Sydney, Seoul, Taipei and Jakarta all in the red.

Traders are now steeling themselves for the release next week of crucial inflation figures and the Fed’s final policy meeting of the year, which will be pored over for an idea about its intentions for 2023.

– Good news, bad news –

“The good news is that the market sees more than a reasonable chance of the Fed reversing gears next year, mainly in response to a downturn,” said Stephen Innes at SPI Asset Management.

“But the bad news is we are likely to fall into recession thanks in no small part to the lagged impact of the most aggressive Fed tightening campaign since (former Fed boss) Paul Volcker” in the 1980s.

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of lockdowns and mass testing that has been blamed for clattering the world’s number two economy.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many of them and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally across markets, particularly in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index has soared more than 30 percent since the end of October, and while it stumbled Wednesday it rose more than two percent Thursday.

There were also gains in Shanghai, Singapore and Wellington.

On oil markets both main contracts bounced after suffering selling over the past four days as demand concerns caused by a possible recession offset China’s reopening.

A jump in US gasoline stockpiles added to the downbeat mood among traders, with WTI sitting at its lowest levels of the year and Brent at its weakest since January.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,480.49 (break)

Hong Kong – Hang Seng Index: UP 2.2 percent at 19,230.99

Shanghai – Composite: UP 0.1 percent at 3,203.89

Euro/dollar: DOWN at $1.0500 from $1.0510 on Wednesday

Dollar/yen: UP at 136.87 yen from 136.57 yen

Pound/dollar: DOWN at $1.2183 from $1.2209

Euro/pound: UP at 86.19 pence from 86.05 pence

West Texas Intermediate: UP 0.8 percent at $72.58 per barrel

Brent North Sea crude: UP 0.7 percent at $77.67 per barrel

New York – Dow: FLAT at 33,597.92 (close)

London – FTSE 100: DOWN 0.4 at 7,489.19 (close)

Major stock markets were hit by more selling Wednesday on growing recession fears, with Chinese trade data adding to the gloomy outlook and US oil prices finishing at another 2022 low.

Drops in Asia and Europe followed steep losses on Wall Street Tuesday after the heads of leading US banks warned about tough times in the coming year.

On Wednesday, two of the three major US indices finished lower following a choppy session.

Analysts described the market movements as reflecting hesitancy, ahead of closely-watched consumer price data next week and a Federal Reserve decision on monetary policy.

“Buyers remained a reluctant bunch amid lingering angst about global growth prospects,” said a Briefing.com note, adding that there was likely nervousness ahead of news events with potential to “spark outsized reaction.”

US oil benchmark West Texas Intermediate dropped 3.0 percent to end the day at $72.01 a barrel after US Energy Information Administration data showed a jump in gasoline stockpiles, indicating ebbing consumption in the world’s biggest economy.

The WTI also closed at a 2022 low on Monday, while international benchmark Brent slipped to a level not seen since January.

Analysts note that conditions in the oil market have loosened compared with earlier this year, adding to oversupply worries at a time when more economists are warning of a recession.

The pullback in oil prices also comes amid trader disappointment at a recent decision by OPEC oil exporters not to cut output, and as market watchers expect a price cap on Russian crude to have little impact on output.

– China easing on Covid –

Recession worries have countered optimism at China’s easing of its restrictive Covid-19 policies.

On Wednesday, officials announced a nationwide loosening of restrictions, including a reduction in mandatory PCR tests and allowing of some positive cases to quarantine at home.

In a sign of the impact that zero-Covid policies have had, data released the same day showed imports and exports plunged far more than expected in November.

But while the country edges back to normality, Zhiwei Zhang of Pinpoint Asset Management warned that this will take time.

“The zero-Covid policy has been loosened, but mobility has not recovered much on the national level,” he said. 

“I expect exports will stay weak in the next few months as China goes through a bumpy reopening process.”

– Key figures around 2140 GMT –

New York – Dow: FLAT at 33,597.92 (close)

New York – S&P 500: DOWN 0.2 percent at 3,933.92 (close)

New York – Nasdaq: DOWN 0.5 percent at 10,958.55 (close)

London – FTSE 100: DOWN 0.4 at 7,489.19 (close)

Frankfurt – DAX: DOWN 0.6 percent at 14,261.19 (close)

Paris – CAC 40: DOWN 0.4 percent at 6,660.59 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,920.90 (close)

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,686.40 (close)

Hong Kong – Hang Seng Index: DOWN 3.2 percent at 18,814.82 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,199.62 (close)

Euro/dollar: UP at $1.0510 from $1.0467 on Tuesday

Dollar/yen: DOWN at 136.57 yen from 137.00 yen

Pound/dollar: UP at $1.2209 from $1.2133

Euro/pound: DOWN at 86.05 pence from 86.27 pence

Brent North Sea crude: DOWN 2.7 percent at $77.17 per barrel

West Texas Intermediate: DOWN 3.0 percent at $72.01 per barrel

burs-jmb/bys

Major stock markets were hit by more selling Wednesday on growing fears that Federal Reserve monetary tightening will tip the US economy into recession, with Chinese trade data adding to the gloomy outlook.

Drops in Asia and Europe followed steep losses on Wall Street Tuesday after the heads of leading US banks warned of tough times ahead in 2023. 

JPMorgan Chase chief Jamie Dimon tipped a “mild to hard recession” and Goldman Sachs’ David Solomon said jobs and pay would be hit, while Morgan Stanley and Bank of America were also uneasy about the outlook.

The comments added to the downbeat mood that has coursed through trading floors at the start of the week, after forecast-beating reports on jobs and the giant US services sector fanned worries the Fed would have to push interest rates higher than hoped.

Markets had been rising healthily after a weaker-than-expected inflation reading for October suggested the almost year-long tightening campaign was finally affecting prices.

“Any hopes that the Fed would turn more dovish in the months ahead have been dashed significantly as the vast US services industry is where sticky inflation hangs out,” said SPI Asset Management’s Stephen Innes.

He added that the latest readings suggest rates would go above five percent before the Fed stops hiking, while several observers have suggested they will not be reduced until 2024.

“It would appear the recovery in stocks — bear-market rally, or otherwise — has run out of steam, and investors are left wondering whether what follows next is another test of the lows or simply a correction of that impressive two-month surge,” said market analyst Craig Erlam at trading platform OANDA.

Major Asian and European markets ended the day down.

On Wall Street, bargain-hunting sent the main indices higher at moments, but they were all lower as European markets closed.

– China easing on Covid –

The sombre outlook overshadowed China’s moves to wind back some of its harsh Covid rules that traders hope will kickstart the world’s number two economy, which has been battered this year by months of lockdowns and other containment measures.

In a sign of the impact the zero-Covid strategy has had, data Wednesday showed that imports and exports plunged far more than expected in November.

On Wednesday, officials announced a nationwide loosening of restrictions, including a reduction in mandatory PCR tests and allowing some positive cases to quarantine at home.

But while the country edges back to normality, Zhiwei Zhang, of Pinpoint Asset Management, warned that it would take time.

“The zero-Covid policy has been loosened, but mobility has not recovered much on the national level,” he said. 

“I expect exports will stay weak in the next few months as China goes through a bumpy reopening process.”

Other observers said the recent rally fuelled by the reopening may have gone too far and traders were now taking a step back as they contemplate a likely spike in infections in the country.

Oil prices remained stuck at lows not seen for around a year as demand expectations tumble.

Brent on Tuesday sank below $80 for the first time since January, and fell further on Wednesday. 

“Brent crude oil prices hit their lowest levels this year earlier today as rising recession risks outweighed any optimism over a reopening of the Chinese economy,” said market analyst Michael Hewson at CMC Markets.

– Key figures around 1630 GMT –

New York – Dow: DOWN 0.2 percent at 33,542.92 points

EURO STOXX 50: DOWN 0.5 percent at 3,920.90

London – FTSE 100: DOWN 0.4 at 7,489.19 (close)

Frankfurt – DAX: DOWN 0.6 percent at 14,261.19 (close)

Paris – CAC 40: DOWN 0.4 percent at 6,660.59 (close)

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,686.40 (close)

Hong Kong – Hang Seng Index: DOWN 3.2 percent at 18,814.82 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,199.62 (close)

Euro/dollar: UP at $1.0513 from $1.0470 on Tuesday

Dollar/yen: DOWN at 136.77 yen from 137.04 yen

Pound/dollar: UP at $1.2195 from $1.2133

Euro/pound: DOWN at 86.17 pence from 86.26 pence

Brent North Sea crude: DOWN 1.3 percent at $78.36 per barrel

West Texas Intermediate: DOWN 1.6 percent at $73.05 per barrel

burs-rl/rox

Major stock markets were hit by more selling Wednesday on growing fears that Federal Reserve monetary tightening will tip the US economy into recession.

Drops in Asia and Europe followed steep losses on Wall Street Tuesday after the heads of leading US banks warned of tough times ahead in 2023.

JPMorgan Chase chief Jamie Dimon tipped a “mild to hard recession” and Goldman Sachs’ David Solomon said jobs and pay would be hit, while Morgan Stanley and Bank of America were also uneasy about the outlook.

The comments added to the downbeat mood that has coursed through trading floors at the start of the week, after forecast-beating reports on jobs and the giant US services sector fanned worries the Fed would have to push interest rates higher than hoped.

Markets had been rising healthily after a weaker-than-expected inflation reading for October suggested the almost year-long tightening campaign was finally affecting prices.

“Any hopes that the Fed would turn more dovish in the months ahead have been dashed significantly as the vast US services industry is where sticky inflation hangs out,” said SPI Asset Management’s Stephen Innes.

He added that the latest readings suggest rates would go above five percent before the Fed stops hiking, while several observers have suggested they will not be reduced until 2024.

“It would appear the recovery in stocks — bear-market rally, or otherwise — has run out of steam, and investors are left wondering whether what follows next is another test of the lows or simply a correction of that impressive two-month surge,” said market analyst Craig Erlam at trading platform OANDA.

Major Asian markets ended the day down, while in Europe both Frankfurt and Paris were lower in afternoon trading, but London turned positive after Wall Street opened.

On Wall Street, the S&P 500 and Nasdaq Composite slid at the start of trading, while the Dow was flat. But they quickly pushed higher as bargain-hunters stepped in following days of selling.

– China easing on Covid –

The sombre outlook overshadowed China’s moves to wind back some of its harsh Covid rules that traders hope will kickstart the world’s number two economy, which has been battered this year by months of lockdowns and other containment measures.

In a sign of the impact the zero-Covid strategy has had, data Wednesday showed that imports and exports plunged far more than expected in November.

On Wednesday, officials announced a nationwide loosening of restrictions, including a reduction in mandatory PCR tests and allowing some positive cases to quarantine at home.

But while the country edges back to normality, Zhiwei Zhang, of Pinpoint Asset Management, warned that it would take time.

“The zero-Covid policy has been loosened, but mobility has not recovered much on the national level,” he said. “I expect exports will stay weak in the next few months as China goes through a bumpy reopening process.

“As global demand weakens in 2023, China will have to rely more on domestic demand.”

Other observers said the recent rally fuelled by the reopening may have gone too far and traders were now taking a step back as they contemplate a likely spike in infections in the country.

Oil prices remained stuck at lows not seen for around a year as demand expectations tumble.

Brent on Tuesday sank below $80 for the first time since January, while WTI struck its lowest since December, having plunged from the 14-year highs of around $140 touched in March after Russia invaded Ukraine. 

“The crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies,” said OANDA’s Edward Moya.

“Supplies seem plentiful over the near term and that has everyone hesitating on what was one of the easiest trades of the year.”

– Key figures around 1430 GMT –

London – FTSE 100: FLAT at 7,519.98 points

Frankfurt – DAX: DOWN 0.4 percent at 14,291.81

Paris – CAC 40: DOWN 0.3 percent at 6,666.63

EURO STOXX 50: DOWN 0.3 percent at 3,926.83

New York – Dow: FLAT at 33,594.04

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,686.40 (close)

Hong Kong – Hang Seng Index: DOWN 3.2 percent at 18,814.82 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,199.62 (close)

Euro/dollar: UP at $1.0522 from $1.0470 on Tuesday

Dollar/yen: DOWN at 136.59 yen from 137.04 yen

Pound/dollar: UP at $1.2203 from $1.2133

Euro/pound: DOWN at 86.23 pence from 86.26 pence

Brent North Sea crude: UP 0.7 percent at $79.92 per barrel

West Texas Intermediate: UP 0.4 percent at $74.58 per barrel

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Major stock markets suffered more selling Wednesday on growing fears that Federal Reserve monetary tightening will tip the US economy into recession.

The drop followed more steep losses on Wall Street Tuesday after the heads of leading US banks warned of tough times ahead in 2023.

JPMorgan Chase chief Jamie Dimon tipped a “mild to hard recession” and Goldman Sachs’ David Solomon said jobs and pay would be hit, while Morgan Stanley and Bank of America were also uneasy about the outlook.

The comments added to the downbeat mood that has coursed through trading floors at the start of the week, after forecast-beating reports on jobs and the giant US services sector fanned worries the Fed would have to push interest rates higher than hoped.

Markets had been rising healthily after a weaker-than-expected inflation reading for October suggested the almost year-long tightening campaign was finally affecting prices.

“Any hopes that the Fed would turn more dovish in the months ahead have been dashed significantly as the vast US services industry is where sticky inflation hangs out,” said SPI Asset Management’s Stephen Innes.

He added that the latest readings suggest rates would go above five percent before the Fed stops hiking, while several observers have suggested they will not be reduced until 2024.

– China easing on Covid –

The sombre outlook overshadowed China’s moves to wind back some of its harsh Covid rules that traders hope will kickstart the world’s number two economy, which has been battered this year by months of lockdowns and other containment measures.

In a sign of the impact the zero-Covid strategy has had, data Wednesday showed that imports and exports plunged far more than expected in November.

On Wednesday, officials announced for the first time a nationwide loosening of restrictions, including a reduction in mandatory PCR tests and allowing some positive cases to quarantine at home.

But while the country edges back to normality, Zhiwei Zhang, of Pinpoint Asset Management, warned that it would take time.

“The zero-Covid policy has been loosened, but mobility has not recovered much on the national level,” he said. “I expect exports will stay weak in the next few months as China goes through a bumpy reopening process.

“As global demand weakens in 2023, China will have to rely more on domestic demand.”

Other observers said the recent rally fuelled by the reopening may have gone too far and traders were now taking a step back as they contemplate a likely spike in infections in the country.

Oil prices remained stuck at lows not seen for around a year as demand expectations tumble.

Brent on Tuesday sank below $80 for the first time since January, while WTI struck its lowest since December, having plunged from the 14-year highs of around $140 touched in March after Russia invaded Ukraine. 

“The crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies,” said OANDA’s Edward Moya.

“Supplies seem plentiful over the near term and that has everyone hesitating on what was one of the easiest trades of the year.”

– Key figures around 1145 GMT –

London – FTSE 100: DOWN 0.1 percent at 7,516.42 points

Frankfurt – DAX: DOWN 0.4 percent at 14,293.02

Paris – CAC 40: DOWN 0.4 percent at 6,661.54

EURO STOXX 50: DOWN 0.3 percent at 3,946.83

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,686.40 (close)

Hong Kong – Hang Seng Index: DOWN 3.2 percent at 18,814.82 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,199.62 (close)

New York – Dow: DOWN 1.0 percent at 33,596.34 (close)

Euro/dollar: UP at $1.0498 from $1.0470 on Tuesday

Dollar/yen: UP at 137.64 yen from 137.04 yen

Pound/dollar: UP at $1.2156 from $1.2133

Euro/pound: UP at 86.34 pence from 86.26 pence

Brent North Sea crude: UP 0.2 percent at $79.48 per barrel

West Texas Intermediate: UP 0.1 percent at $74.35 per barrel