HONG KONG – Asian markets were all over the place, and oil prices went down. Traders are worried that rising interest rates by the central bank to fight rising inflation could cause a recession.
Data showing a rise in new cases of COVID-19 in China brought back worries about the government’s plan to lock down towns and cities to get rid of the disease, even though it would hurt the economy.
After the worst January-June for the S&P 500 since 1970, the second half of the year got off to a good start on Wall Street on Friday.A reading on US manufacturing that was worse than expected gave investors hope that banks won’t tighten money for a long time.
That happened after consumer confidence fell, which is a key factor in the world’s biggest economy.
Rodrigo Catril of the National Australia Bank, on the other hand, said that the Federal Reserve and other top financial leaders around the world might not stop raising rates too soon as long as inflation stays high.
He said in a commentary that the data suggests a US economic slowdown is coming, “We haven’t seen any signs that inflationary pressures are easing,” This is an important difference because the Fed will keep tightening until it sees evidence that inflationary pressures are easing.
Inflation in the eurozone hit a record high of 8.6% in June, which shows how hard it will be for officials to keep prices from going up. This month will be the first time in more than a decade that the European Central Bank raises interest rates.
Still, rising prices are a big problem, but Chris Weston of Pepperstone Group said that the way people think is “shifting radically from worries about inflation to a focus on growth.”
Asia had trouble keeping up with New York, which was a strong leader.
As investors came back from a long weekend and tried to make up for Friday’s losses, Hong Kong went down. Shanghai, Seoul, Taipei, and Jakarta also went down.
Tokyo, Sydney, Singapore, Taipei, and Wellington, on the other hand, went up.
Over the weekend, the number of new COVID cases in China went up. This made investors nervous because they don’t want to see a repeat of the painful lockdowns in major cities like Shanghai, which hurt the world’s second largest economy.
On Saturday and Sunday, there were more than 700 new infections in the country. For the last two weeks, that number had been below 50 a day.
The first two COVID deaths in Macau happened over the weekend, and the government said it might lock down the whole city to fight the disease. The comments sent Hong Kong-listed shares in Macau casinos plunging.
Concerns about the recession weighed on oil prices Monday as traders bet on a drop in demand, while the head of Asia at crude trading giant Vitol said he saw signs consumers were beginning to feel the pressure of high commodity costs.
“There’s very clear evidence out there of economic stress being caused by the high prices, what some people refer to as demand destruction,” said Mike Muller. It is “not just oil, but also liquefied natural gas”.
