RISING NUMBERS An electronic quotation board displays the share prices of the Tokyo Stock Exchange at a foreign-exchange brokerage in Tokyo on Monday, June 20, 2022. AFP PHOTO
HONG KONG: Markets were mixed on Monday after paring earlier losses, but sentiment continues to be clouded by fears that central banks’ moves to rein in soaring inflation would induce a recession.
The tepid performances come after a selloff last week, fueled by the Federal Reserve’s (Fed) largest interest rate increase in 28 years and its warning of more hikes to come, while increases in the United Kingdom and Switzerland added to the gloom.
And while the S&P 500 and Nasdaq saw gains last Friday, there is a sense that indexes still have some way down to go before they find a bottom, with data suggesting that economies are beginning to feel the pinch.
Cleveland Fed chief Loretta Mester added to the worry, saying the risk of a recession in the United States was increasing, and it would take several years to bring inflation down from four-decade highs to the bank’s 2-percent target.
She told CBS’ “Face The Nation” program on Sunday that while she was not predicting a contraction, the US central bank’s decision not to act sooner to fight rising prices was hurting the economy.
In Asian trade on Monday, Tokyo, Shanghai Sydney, Seoul, Taipei, Bangkok and Wellington were all in the red, though there were gains in Hong Kong, Mumbai, Singapore, Manila and Jakarta.
London, Paris and Frankfurt edged up in early trade.
Analysts warned there was likely to be more pain ahead for traders as the war in Ukraine dragged on and uncertainty continued to reign.
“Central banks’ hawkish rhetoric and concerns over a global economic slowdown/recession [are] not helping sentiment and at this stage it is hard to see a turn in fortunes until we see evidence of a material ease in inflationary pressures,” National Australia Bank’s Rodrigo Catril said.
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 detent in the Ukraine-Russia war, escalation will continue to drive energy price fears so it could be a tough road ahead.”
Oil prices edged up on Monday after suffering a hefty drop on June 17 over demand worries caused by a possible recession.
However, US Energy Secretary Jennifer Granholm said prices could continue to surge if the European Union cut off imports of the commodity from Russia in response to its invasion of its pro-West neighbor.
She said US President Joe Biden had called on global suppliers to ramp up output to help temper the price rises, with the leader to discuss the issue at an upcoming visit to Saudi Arabia next month.