25 May 2022, 09:55

Asian markets swing as traders mull dark outlook

HONG KONG, May 25, 2022 (BSS/AFP) - Asian markets fluctuated Wednesday, with
little sign of any relief from recent dour performances as investors remain
fearful about the economic outlook owing to the impact of inflation, higher
interest rates, China's slowdown and the Ukraine war.

A series of weak indicators around the world and downbeat forecasts from big
firms have chilled trading floors in recent weeks as the surge in prices
begins to drag on consumer confidence, with warnings now swirling of a
possible global recession.

The tech sector was again in the firing line after Snap, the parent of social
media app Snapchat, provided a gloomy economic outlook, sending its shares
diving more than 40 percent.

Wall Street titans followed Snap down, with Facebook-parent Meta and Google-
parent Alphabet tanking.

Tokyo, Hong Kong and Jakarta were down while Shanghai, Sydney, Seoul,
Singapore, Taipei and Manila rose.

The mood was not helped by news that US new home sales tanked in April while
the Richmond Fed manufacturing index also fell, with both at the lowest
levels since the pandemic began in 2020.

"The market is moving its focus -- and has been for the last month or so --
from inflation concerns to growth concerns," said Ellen Hazen, of FL Putnam.

Investors are now wearily looking to the Fed's next move on interest rates,
with expectations for more half-point hikes to come as officials struggle to
bring inflation down from four-decade highs.

There was a little hope after one policymaker, Atlanta Fed chief Raphael
Bostic, suggested a break in the increases in September could make sense as
the bank tries to avert a recession.

National Australia Bank's Tapas Strickland said while it was not clear that
the Fed was close to being more supportive of markets, "it is clear that
growth headwinds are becoming more evident in the data, particularly stemming
from the profit reporting season".

"The Fed of course remains focused on inflation, but if inflation reads were
to start to moderate, then Bostic has opened up the possibility of a Fed

Meanwhile, China continues to struggle with the fast-spreading Omicron
variant, with leaders sticking to their zero-Covid strategy despite the dire
impact on the economy of lockdowns.

And with no easing of that policy in sight, observers warned that a series of
recent support measures would not be enough to lift optimism.

"Fiscal multipliers will be minimal in an economy where economic interaction
and activity have slowed sharply," said Stephen Innes of SPI Asset

"Moving beyond mobility restrictions in short order is a pre-condition, but
not a guarantee, for an Asia-led economic recovery."

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.1 percent at 26,713.08 (break)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 20,074.59

Shanghai - Composite: UP 0.2 percent at 3,076.11

Euro/dollar: DOWN at $1.0709 from $1.0739 on Tuesday

Pound/dollar: DOWN at $1.2524 from $1.2535

Euro/pound: DOWN at 85.50 pence from 85.64 pence

Dollar/yen: UP at 127.13 yen from 126.86 yen

Brent North Sea crude: UP 1.2 percent at $114.93 per barrel

West Texas Intermediate: DOWN 1.2 percent at $111.08 per barrel

New York - Dow: UP 0.2 percent at 31,928.62 (close)

London - FTSE 100: DOWN 0.4 percent at 7,484.35 (close)

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