Asian shares fall on inflation, recession concerns; oil skids

Shanghai, June 2 (BNA): Asian stock markets fell today, Thursday, amid widespread investor concerns about rising inflation and the risk of recession, while oil prices fell after a report of assurances from Saudi Arabia about production.

Global benchmark Brent crude fell more than 2% a barrel at $113.86 ahead of a meeting of oil-producing nations later in the day, which is expected to pave the way for increased production.

US crude also fell more than 2% to $112.55 a barrel.

The pace of the decline in oil prices accelerated after the Financial Times reported that Saudi Arabia may be ready to increase oil production.

Said Matt Simpson, senior market analyst at City Index in Sydney, Reuters reported.

“More supply basically calms some of those inflationary fears, even if there is a lot of work to be done when it comes to fighting inflation.”

Investors’ concerns about inflation and stagnation were exacerbated by the uncertainty caused by the pace of the US Federal Reserve’s rate hike.

On Wednesday, a survey showed US manufacturing activity was stronger than expected in May and did little to allay those concerns. Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., likened the challenges facing the US economy to a “hurricane.”

Rodrigo Cattrell, chief foreign exchange strategist at NAB, said details of the survey showed that price signals “remain consistent with very strong inflationary pressures” and negative employment growth in the manufacturing sector.

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“The services sector is a big US employer, so it will be important to see what the ISM will reveal to services on Friday,” he said.

A new survey of South Korea’s factory activity on Thursday showed growth slowed in May as import and export orders shrank, the latest indicator of global manufacturing problems.

In morning trading, MSCI’s broadest index of Asia Pacific shares outside Japan was down 1%. China’s blue-chip index fell 0.45%, Australian shares fell 0.90%, and the Kospi in Seoul was down about 1%.

In Tokyo, the Nikkei was down 0.26%.

Asian moves tracked Wall Street’s weakness overnight, with the Dow Jones Industrial Average down 0.54%, the S&P 500 losing 0.75% and the Nasdaq Composite down 0.72%.

While the strong US manufacturing data did little to lift US stocks, it did support the dollar.

In Asian trade, the global dollar index settled at 102.56, while the yen settled slightly to 130.05 against the dollar as US yields slipped from their highest levels in the week, and the euro rose 0.05% to $1.0651.

The benchmark 10-year US Treasury recently yielded 2.9149%, down from a US close of 2.931% on Wednesday, while the two-year yield fell to 2.6517% from a close of 2.664%.

Lower yields kept gold prices steady after hitting a two-week low on Wednesday. Spot gold was little changed at $1,845.08 per ounce.


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