HONG KONG – Asian markets fell again on Monday, and oil prices kept going down because people are getting more worried that moves by the central bank to stop inflation from rising will cause a recession.
The losses came after a sell-off last week, which was caused by the Federal Reserve’s sharp interest rate hike, which was the biggest in almost 30 years, and a warning that more would come. Interest rate hikes in Britain and Switzerland also made things look worse.
Even though the S&P 500 and Nasdaq both rose on Friday, there is a sense that the indexes have a long way to fall before reaching a bottom.This is because economic data shows that economies are starting to feel the effects of the recession.
The head of the Cleveland Fed, Loretta Mester, added to the worries by saying that the US was getting closer to a recession and that it would take a few years to bring inflation down from its highest point in four decades to the bank’s target of 2%.
She said on CBS’s “Face The Nation” on Sunday that she didn’t think the economy would shrink, but that the Fed’s decision not to act sooner to stop rising prices was hurting it.
Asian traders were having a hard time at the start of trade. Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul, Taipei, Jakarta, and Wellington were all in the red.
Analysts said that traders could expect more trouble as the Ukraine war drags on and uncertainty remains.
“Central banks’ hawkish talk and worries about a global economic slowdown or recession aren’t helping sentiment,” said Rodrigo Catril of the National Australia Bank. “It’s hard to see a turn in fortunes until we see evidence of a material ease in inflationary pressures.”
And Stephen Innes of SPI Asset Management said, “Most of these major central banks are praying for some relief from inflation and hoping the data falls in line, but unless there is a pause in the Ukraine-Russia war, escalation will continue to drive energy price fears, so it could be a hard road ahead.”
Still, oil prices went down even more on Monday after a big drop on Friday, which was caused by fears that a recession could hurt demand.
But US Energy Secretary Jennifer Granholm said that prices could keep going up if the European Union stops buying the commodity from Russia because of the war in Ukraine.
She said that Joe Biden had asked suppliers around the world to increase output to help keep prices from going up too much. The president will talk about the issue when he goes to Saudi Arabia next month.