An electronic quote card shows Tokyo Stock Exchange numbers (foreground) and the rate of the yen against the US dollar (R) at a currency exchange agency in Tokyo on August 2, 2022. (Photo by Kazuhiro NOGI / AFP )
HONG KONG, China (AFP) – Asian equities are mostly up on Friday as the drop in oil prices to pre-war levels in Ukraine sparked hopes of slowing inflation and rising US interest rates. central bank, as focus shifts to key US employment data later in the day.
However, while markets enjoyed a largely positive week, optimism remains a premium as traders worry about issues including the conflict in Eastern Europe, Chinese military exercises around Taiwan and a possible global recession.
Crude oil was up, but expectations of a shrinking economies – dampening demand – sent commodity plummeting by more than 10% this week, with US data indicating Americans were driving less now than summer 2020 at the peak of the pandemic.
And while analysts are beating the drum of the recession, traders are recovering from the possibility of a respite from central bank monetary tightening.
“The recent drop in oil prices, which are now trading below levels immediately prior to the Russian invasion of Ukraine, contributed to the market’s perception that inflation could peak soon, taking pressure off the Fed to rise. rates equally aggressively, ”Australia Bank’s National Rodrigo Catril said.
Traders will now be watching closely the release of a crucial US employment report later on Friday for a new snapshot of the world’s leading economy.
The Federal Reserve said its weakness rate decision will be data driven, with economic signals believed to mean any hike will be slight.
Officials said the economy remains healthy despite four decades of high inflation and a sharp rise in financial costs, while many have suggested they are open to bigger hikes to outrun prices.
And Stephen Innes of SPI Asset Management said: “While some high-frequency data suggests that employment and inflation have eased in parts of the economy, markets may be wondering if they are weak enough to change the Fed’s course. “.
In a sign of the long way to go, the Bank of England has raised rates the most since it was made independent in 1997, and warned that inflation is likely to exceed 13% as Britain experiences a prolonged recession.
Wall Street provided a weak lead after recent gains, but Asia was broadly up.
Tokyo, Shanghai, Sydney, Seoul, Jakarta, Wellington and Singapore all increased, although Hong Kong and Manila fell.
Taipei rose more than two percent on easing concerns over a conflict with Beijing, even as China conducts its largest-ever military exercises around Taiwan in response to a visit by US House Speaker Nancy Pelosi this week. .
On Thursday, China launched a series of exercises in multiple areas, straddling some of the busiest sea routes in the world.
While Taipei did not say where the missiles landed or whether they flew over the island, Japan said that of the nine missiles it detected, four “were believed to have flown over the main island of Taiwan.”
Geir Lode, of Federated Hermes, said: “For a world facing a whole host of great challenges, there is certainly a lot of optimism going on at the moment.
“Inflation is challenging corporate earnings and weighing on consumer sentiment. Global recession appears likely as growth becomes increasingly scarce. Geopolitical tensions and the rise of populism accelerate the trend towards localization (and increase the risk of even darker futures). Climate change is upon us all.
“Yet stocks this week continued the strong July rally.”
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: + 0.7% to 28,131.87 (break)
Hong Kong – Hang Seng Index: DOWN by 0.1% to 20,145.45
Shanghai – Composite: up 0.1% to 3,191.55
Euro / dollar: DOWN to $ 1.0233 from $ 1.0248 on Thursday
Pound / dollar: DOWN to $ 1.2139 from $ 1.2166
Euro / pound: UP to 84.31 pence from 84.21 pence
Dollar / yen: up to 133.22 yen from 132.95 yen
West Texas Intermediate: up 0.4 percent to $ 88.87 a barrel
North Sea Brent Crude Oil: + 0.2% to $ 94.35 per barrel
New York – Dow: DOWN 0.3% at 32,726.82 (close)
London – FTSE 100: APARTMENT at 7.448.06 (close)
© Agence France-Presse