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Asian Equities Rise as Investors Expect a Recession

The euro traded at a two-year low on Thursday, while oil started to recover overnight losses. Investors were concerned about the chances of a recession and a likely stop in interest rate rises. Asian markets achieved modest gains.

By the afternoon, the largest MSCI index of Asia-Pacific equities outside of Japan had up 1.02 percent after edging up from a two-month low. Nikkei in Japan finished 1.47 percent higher. The KOSPI index in South Korea increased 1.92 percent, marking the highest day in over two weeks. One of the biggest movers was Samsung Electronics (OTC: SSNLF), which reported an earnings forecast that signalled a recovery in its semiconductor sector. The Australian and New Zealand currencies each saw gains of 0.51 percent and 0.54 percent.

Outlook on The Global Stock Market

Before the start of European markets, FTSE and Euro STOXX futures were up 1.16 and 1.17 percent, respectively. After trading on Wednesday, the S&P 500 index had increased by 0.4 percent, while Treasuries fell as investors responded to generally encouraging U.S. economic data, which showed robust job vacancies, and hawkish minutes from the June Federal Reserve meeting.

Standard U.S. 10-year rates recently stood at 2.917 percent, down from a more than 11-year high of 3.498 percent on June 14th.

The labor market in the United States is doing better than projected, and the services sector is still doing well. The following significant data point will be released on Friday when broader labor market statistics will be available to paint a more complete picture of the condition of the world’s largest economy.

The Fed-led worldwide rate tightening in recent months has fueled worries of a recession and harmed commodities like copper, oil, and iron ore that are sensitive to economic growth. As investors believe that Europe is the starting point of a global downturn, the euro has also taken a beating. Early in the Asian session, Brent oil futures fell under $100 a barrel, but they soon rebounded and closed at $100.88, down roughly 10% for the week. Shanghai copper held steady but has dropped 20% in the past month.



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