Asian stocks slide on inflation fears; Singapore STI up 0.4% as bank stocks rise

TOKYO (REUTERS) – Stocks tumbled across Asia on Wednesday morning (June 29), extending overnight losses on Wall Street amid worries about recession, inflation and high oil prices, this which also boosted the safe-haven dollar.

Japan’s Nikkei fell 1.2%, while Australia’s S&P/ASX 200 fell 1.1% and South Korea’s Kospi fell 1.6%.

Asian stocks had ended the previous session on a positive trajectory after China announced a relaxation of its quarantine requirements for inbound passengers, in what some are observing as the biggest relaxation to date of its “zero Covid” strategy. .

But the impact faded on Wednesday.

“Inevitably, markets tend to overreact to this kind of news,” said Carlos Casanova, senior economist at UBP in Hong Kong. “For this to be sustainable, we really want to see these measures materialize into real reopening.”

Chinese blue chips, which had hit a four-week high the previous day, lost 0.8% while Hong Kong’s benchmark fell 1.6%.

The Singapore market bucked the trend as local bank stocks rose, with the Straits Times index up 0.4% at the lunch break.

The losses in Asia followed a turbulent day in US markets, with the S&P 500 index falling more than 2% after data showed US consumer confidence fell to a 16-month low in June. due to fears that high inflation could cause a significant slowdown in the economy. in the second half of the year.

Renewed concerns about the potential for a global recession pushed investors towards the safe haven dollar, and the US dollar index remained firm at 104.4.

The euro fell 0.6 percent against the greenback overnight and was little changed early in Asia at US$1.0529. The Japanese yen stood at 136.03 to the dollar, not far from last week’s 24-year low of 136.7.

The yen has struggled as the Bank of Japan maintains loose monetary policy even as other major banks tighten, a point reiterated by BOJ Governor Haruhiko Kuroda on Wednesday.

The yield on 10-year US Treasuries held steady at 3.1697%.

Oil prices retreated slightly after three sessions of gains, but tighter global supply supported the market. An overnight report suggested that Saudi Arabia and the United Arab Emirates are unable to significantly increase production in the near future.

Brent crude futures fell 0.53% on the day to US$117.35 a barrel. US Crude was down 0.37% to settle at US$111.39.

“I think immediate prices are likely to remain high,” UBP’s Casanova said. “But I don’t think we’ll see any significant spillovers to other Asian asset classes, potentially excluding bonds from some countries that are very sensitive to changes in energy prices.”

Spot gold rose slightly, gaining 0.15% to trade at US$1,822.48 an ounce.

Garland K. Long