Asian Markets Mixed Ahead of Fed Report, US Employment Data → BusinessMirror

Asian stock markets were mixed on Tuesday ahead of US employment updates amid fears of a possible global recession.

Shanghai and Hong Kong won. Seoul and Sydney refused. Oil prices have fallen.

Traders fear that after a year of significant declines in major stock markets, the Federal Reserve and other central banks, which have repeatedly raised interest rates to bring down inflation, may want to push the world into recession.

Inflation could “remain well above 3% by the end of 2023, which is simply too high for the central bank to calm down,” Stephen Innes of SPI Asset Management said in the report.

The Shanghai Composite index added 0.2% to 3094.12 points, while the Hong Kong Hang Seng added 0.6% to 19906.65 points. Japanese markets were closed for the holiday.

The Seoul Kospi shed 0.8% to 2208.36 after South Korea’s 2022 exports fell 9.5% from the previous year and the country posted its biggest trade deficit ever.

The Sydney S&P-ASX 200 lost 1.6% to 6,927.20 after Australian house prices fell 1.1% and manufacturing activity index eased. Singapore refused, while Jakarta moved forward. New Zealand markets were closed for the holiday.

The most closely watched data this week is the reports from the latest Fed meeting, due on Thursday. This will give traders an update on what the US central bank thinks about the possible need for further rate hikes.

On Friday, it will be followed by US employment data.

Forecasters expect monthly job growth to ease in December, which they hope could prompt the Fed to scrap plans for further rate hikes. But the Fed is “clearly focused on curbing inflation,” which “may leave price data as a key driver of market movement,” IG’s Yip Jun Rong said in the report.

Traders also expect the publication of corporate reports in mid-January.

Global central banks are trying to dampen inflation, which in many countries is at multi-decade highs. The situation was exacerbated by the Russian invasion of Ukraine, which disrupted commodity markets and caused a surge in oil and wheat prices.

U.S. financial markets were closed on Monday for a holiday after the Wall Street benchmark S&P 500 ended 2022 with a 19.4% drop, the biggest drop since the 2008 financial crisis. The company lost $8.2 trillion in share value, according to S&P Dow Jones Indices.

Market benchmarks in Germany and France closed higher on Monday.

The Fed’s key lending rate is in the range of 4.25% to 4.5%, up from near zero after seven hikes last year. The US central bank predicts that it will reach a range of 5% to 5.25% by the end of 2023 with no rate cut until 2024.

In energy markets, US benchmark oil lost 20 cents to $80.06 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.86 on Monday to $80.26. Brent crude, the benchmark for international oil trading, fell 26 cents to $85.65 a barrel in London. In the previous session, it added $2.45 to $85.91.

The dollar fell to 130.17 yen from 130.80 yen on Monday. The euro fell to $1.0667 from $1.0700.

Image credits: AP / Lee Jinman