Asian stocks are generally down as recession fears intensify

BANGKOK (AP) — Asian stocks were mostly down on Monday after Wall Street ended a miserable September with a 9.3% loss, the worst monthly decline since March 2020.

Tokyo rose while other regional markets declined. Shanghai was closed for the week-long Chinese National Day holiday.

Japan’s Nikkei 225 index gained 1.1% to 26,215.79 after a quarterly Bank of Japan survey showed manufacturing sentiment had darkened, reflecting rising costs, weaker yen and ongoing pandemic-related restrictions.

The main measure of the “tankan”, measuring the sentiment of large manufacturers, was plus 8, compared to plus 9 in the previous quarter. The tankan measures business sentiment by subtracting the number of companies that say business conditions are negative from those that say they are positive.

“Today’s Tankan survey suggests that while the services sector is benefiting from the diminishing virus wave, the outlook for the manufacturing sector continues to deteriorate,” according to a report from Capital Economics. He noted that this was the third straight decline in sentiment for the world’s third-largest economy.

The BOJ has kept interest rates below zero in a longstanding effort to encourage inflation and contain deflation as the country ages and its population shrinks. This has kept the value of the yen low against the US dollar, which has strengthened as the Federal Reserve raises rates to combat decades-high inflation.

The dollar was trading at 145.04 yen early Monday, down from 144.68 yen late Friday. The euro was at 97.98 cents, down from 97.96 cents.

Elsewhere in Asia, Hong Kong’s Hang Seng Index fell 0.9% to 17,073.81. Australia’s S&P/ASX 200 slipped 0.3% to 6,456.90. Taiwan’s Taiex lost 0.9% and Bangkok’s SET fell 1.3%.

Wall Street closed a miserable September on Friday with the S&P 500’s worst monthly slippage since the coronavirus pandemic crushed global markets. It is now at its lowest level since November 2020 and is down more than a quarter since the start of the year.

The Fed has been at the forefront of the global campaign to slow economic growth and hurt labor markets just enough to reduce inflation, but not enough to cause a recession. On Friday, the Fed’s preferred measure of inflation showed that it was worse last month than economists had expected. This should allow the Fed to keep rates rising and keep them high for some time, increasing the risk that it will go too far and cause a slowdown.

Vice Chairman Lael Brainard was the latest Fed official on Friday to insist he will not cut rates prematurely.

The S&P 500 fell 1.5% to close at 3,585.62 on Friday. The Dow Jones Industrial Average fell 1.7% to 28,725.51. The Nasdaq composite slipped 1.5% to 10,575.62. The tech-focused index fell 10.5% in September and is down 32.4% so far this year.

Small company stocks also had a tough September. The Russell 2000 ended the month down 9.7%. On Friday, it was down 0.6% at 1,664.72.

Other concerns loom over global markets, including Russia’s invasion of Ukraine. A UK government plan to cut taxes recently sent bond markets tumbling amid fears it could further worsen inflation. Bond markets only calmed down a bit after the Bank of England last week pledged to buy, but plenty of UK government bonds are needed to drive yields lower.

The astonishing and rapid rise of the US dollar against other currencies, meanwhile, increases the risk of creating so much stress that something will crack somewhere in the global markets.

In other trading on Monday, benchmark U.S. crude oil gained $2.18 to $81.67 a barrel in electronic trading on the New York Mercantile Exchange. It lost $1.74 to $79.49 a barrel on Friday.

Brent crude, the standard for international oil pricing, rose $2.28 to $87.42 a barrel.

The specter of a possible global recession has led major oil-producing nations to consider further production cuts that would limit supplies and push prices higher.

OPEC and allied oil-producing nations, including Russia, cut supplies to the global economy slightly a month ago, underscoring their displeasure as recession fears help drive down crude prices.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Comments are closed.