World shares mixed on worries over rate hikes, inflation
BANGKOK — World stocks were mixed Tuesday, with European benchmarks losing ground after most Asian shares advanced.
London, Paris, Frankfurt, and Hong Kong fell, while Tokyo and Sydney rose. U.S. futures were higher while oil prices fell.
Rising food and energy prices are raising concerns about how the Federal Reserve and other central bankers will manage inflation without preventing a revival in business activity after the doldrums caused by coronavirus outbreaks. The conflict in Ukraine, which has contributed to those price pressures and a rise in food prices, did not ease as Russia launched a long-feared and broad ground offensive to seize control of Ukraine’s eastern region.
“One problem is that it is becoming increasingly difficult to find a voice opposing the global recession. Stephen Innes, of SPI Asset Management, stated that the negativity surrounding the economy is pervasive and that it can keep stock pickers off-guard.
On Wall Street, the futures for the S&P 500 and the Dow Jones Industrial Average were 0.4% higher. The S&P 500 slipped less than 0.1% on Monday while the Dow lost 0.1% and the Nasdaq also fell 0.1%.
In Asian trading, Hong Kong’s Hang Seng index led the declines, falling 2.3% to 21,027.76. Concerns about Chinese property developers and regulatory crackdowns against technology companies were weighing heavily on sentiment.
The People’s Bank of China conducted a 10 billion yuan ($1.6 billion) reverse repo operation to help add liquidity to the banking system, the state-run Xinhua News Agency reported. The reverse repo is when the central bank purchases securities from commercial banks in exchange for future sale.
Meanwhile, the central bank, through a banking industry association, encouraged smaller lenders to reduce the interest they offer on deposits to alleviate pressure on their finances, the financial magazine Caixin reported. The PBOC reduced the reserve bank reserves to allow banks to lend more money.
China reported Monday its economy grew by 1.3% in January-March, compared to 1.4% in the prior quarter. The economy grew at 4.8% annually, which is better than expected. However, economists warned that the effects of shutting down dozens of cities to combat coronavirus outbreaks, including Shanghai, were still to be felt.
The Shanghai Composite index lost less than 0.1% to 3,194.03.
But most regional markets advanced. Tokyo’s Nikkei 225 index rose 0.7% to 26,985. 09 and the Kospi in Seoul added 1% to 2,718.89. In Sydney, the S&P/ASX 200 gained 0.6% to 7,565.20. The Sensex in India rose 0.4%, while the SET in Bangkok jumped 0.6%.
Japan’s finance Minister Shunichi Suzuki reiterated Tuesday his concern about the sharp rise in the dollar against the yen. This is due to a divergence between monetary policies of both the Bank of Japan (which keeps interest rates low to support the economy’s faltering state) and the Federal Reserve (which raises rates to combat rising inflation).
The dollar briefly was trading at 128. 42 yen, up from 126. 99 late Monday. It has been hovering at 20-year highs for weeks. A weaker yen makes Japanese exports competitive overseas and increases yen-denominated profits for companies when they convert them to dollars. However, it also increases import costs of oil and gas, food and other necessities for the third-largest economy in the world.
In another trading:
The benchmark U.S. oil price fell $1. 19 to $107. 02 per barrel in electronic trading on the New York Mercantile Exchange. It rose 1.2% to settle at $108. 21 per barrel on Monday.
Brent crude oil, the international price standard, dropped $1. 04 to $112. 12 per barrel. The euro rose to $1. 0802 from $1.0781.
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