Asia stocks weighed by inflation concerns, China tech selling

Hong Kong, May 23 (BNA): Asian shares came under pressure on Monday, as concerns about inflation and rising interest rates continued to hamper the global economic outlook and a fresh sell-off in technology shares weighed on Chinese markets.

MSCI’s broadest index of Asia Pacific shares outside Japan was flat, after US stocks ended the previous session with slight gains for the day. Reuters reported that the index is down 3.6 percent so far this month.

The negative tone was evident as Hong Kong’s Hang Seng fell 0.38% and the mainland’s CSI300 fell 0.37%, led by a 1.5% decline in technology companies.

Australian shares rose 0.42% while Japan’s Nikkei rose 0.8%.

The yield on the benchmark 10-year Treasury rose to 2.7883% from its US close of 2.877% on Friday.

The two-year yield, which rose as traders expected a hike in the federal funds rate, rose to 2.5869%, up from 2.583%.

The uncertainty in market sentiment this week came after the S&P 500 index gained only 0.01% on Friday.

The Nasdaq is down 0.30% while the Dow Jones Industrial Average is up 0.03%.

Despite marginal gains, the S&P 500 and Nasdaq posted their seventh consecutive week of losses, the longest losing streak since the end of the dotcom bubble in 2001.

The Dow Jones suffered its eighth consecutive weekly decline, the longest since 1932 during the Great Depression.

Inflationary pressures remain at the forefront of investors’ minds, given the German wholesale inflation figures published on Friday which showed a higher-than-expected jump indicating that prices will remain elevated in the short-term future.

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German PPI for April rose 2.8% for the month, which means annual growth has been consistently high at 33.5%.

In Australia, Labor ended nearly 10 years of rule by a Conservative government in a general election over the weekend.

While Labor has promised climate reforms, housing and improved social care, analysts do not believe the change in government will significantly affect the nation’s economy.

“In our view, there were very few proposals by the incoming government during the election campaign that would require us at this point to reconsider our economic forecasts,” CBA economists wrote on Monday.

“In other words, our economic outlook and our call for the RBA have not changed despite the change in national leadership.”

In early Asian trade, the dollar was up 0.04% against the yen to 127.9. It is still far from this year’s high of 131.34 on 05-09-2022.

US crude fell 0.04% to $110.24 a barrel. Brent crude rose 0.23 percent to $112.68 a barrel.

Concerns about global economic growth led to renewed support for gold.

“Gold prices saw their first weekly gain since mid-April as safe haven demand was boosted by concerns about economic growth amid rising inflation,” ANZ analysts said in a research note on Monday. The weak US dollar also boosted investor appetite.

Spot gold was up 0.3% early Monday at $1,847.0226 an ounce.


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