BEIJING/Hong Kong, June 23 (BNA): Asian stocks fluctuated while commodity prices fell on Thursday as mounting concerns about the risks of a global recession amid interest rate hikes by the Federal Reserve kept investor sentiment fragile.
MSCI’s broadest index of Asia-Pacific shares outside Japan reversed earlier gains to settle mostly in Asian trade. Shares in South Korea fell, while Japan’s Nikkei was broadly unchanged, Reuters reports.
Hong Kong’s Hang Seng Index rose 0.6%, after news that Chinese President Xi Jinping chaired a high-level meeting on Wednesday that approved a plan for the healthy development of China’s major payment companies and the fintech sector.
Overnight, the dollar fell along with US Treasury yields after Federal Reserve Chairman Jerome Powell acknowledged, in testimony before the US Senate Banking Committee, that a recession was a “potential possibility,” but the Fed is not trying to engineer it.
A Reuters poll showed that the Fed will deliver another 75 basis point rate hike in July, followed by a half percentage point rise in September, and won’t back down to quarter point moves until November at the earliest. .
“What is clear is that the market is viewing a recession as a growing possibility, a view heard by Powell, who made it clear that a recession was a possibility rather than an intent,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne.
“Equities have held a good hold despite the declines in commodities, there has been a rotation in low-risk areas in the market and defensive sectors, with expected outflows from energy and materials stocks.”
US stocks reversed earlier gains and ended the session slightly lower. The Dow Jones Industrial Average fell 0.15%, the S&P 500 lost 0.13%, and the Nasdaq Composite fell 0.15%.
Investors continue to assess the risks of central banks pushing the global economy into recession as they try to curb inflation by raising interest rates.
Concerns about the demand outlook have exhausted commodity prices, with oil on Thursday dropping to its lowest level in more than a month. Brent crude fell 2% to $109.49 a barrel, and US crude fell 2.3% to $103.75 a barrel.
The yield on the benchmark 10-year Treasury fell slightly in early trading to 3.1430%, the lowest in nearly two weeks, compared to the US close of 3.156% the day before.
The two-year yield, which rose as traders expected an increase in the Fed funds rate, rose to 3.0391% compared to the US close at 3.056%.
In the foreign exchange markets, the dollar fell 0.1% against a basket of major currencies, after falling 0.2% in the previous session.
However, the index is up more than 8% this year, reflecting the broad sense of risk-off and the Fed’s dollar-yielding advantage.
These factors were underlined by the South Korean won, which fell below a psychological threshold of 1,300 per dollar for the first time in 13 years, amid fears of a global economic recession.
Gold was slightly lower, with spot prices trading at $1,835.19 an ounce.