Asian markets mixed as Fed fears eased by China Covid eased
Asian markets were mixed on Friday at the end of a week raising hopes that the Federal Reserve will ease its monetary tightening campaign, offset by fresh lockdown fears as Covid-19 cases rise in China.
With Wall Street closed for the Thanksgiving break, trading was light and there was little catalyst to drive action on the trading floors and investors are now looking forward to next week’s US jobs data release.
Market sentiment improved this month as a raft of indicators suggested the world’s leading economy was showing signs of weakness after the Fed hiked interest rates.
The standout reports were consumer and wholesale inflation, which came in much lower than forecast and gave the central bank room to scale back its hawkish stance.
And while a selection of Fed officials stood in line to warn of further tightening, the expectation is that the days of record 75 basis point hikes are over.
That has somewhat eased fears that soaring borrowing costs could push the US economy into recession, although many observers still expect a contraction.
However, Asian stocks struggled to end the week on a positive note as Tokyo, Hong Kong, Singapore, Seoul, Manila and Jakarta were all down. There were increases in Shanghai, Sydney, Wellington and Taipei.
Regional sentiment has been hurt by ongoing fears over the rise in Covid cases in China, which authorities are trying to stem with a series of targeted measures in major cities like Beijing and Shanghai, despite the lack of full lockdowns.
Still, SPI Asset Management’s Stephen Innes said there seemed less concern about the government’s response as it looks to relax parts of its strict Covid-zero strategy.
“Investors are realizing that it’s normal for cases to increase as the Chinese economy begins its long and winding road to normalcy,” he said in a comment.
“So investors in equity and FX markets are cautiously looking through the current lockdown regime while betting on the more optimistic interpretation that China is approaching ‘Covid-Zero’ borders and authorities’ efforts to ease restrictions continue .”
– Key figures at 0230 GMT –
Tokyo – Nikkei 225: down 0.3 percent at 28,286.94 (breakout)
Hong Kong – Hang Seng Index: down 1.3 percent at 17,435.15
Shanghai — Composite: up 0.3 percent at 3,097.12
Euro/dollar: rise to $1.0415 from $1.0411 on Thursday
Dollar/yen: rise to 138.75 yen from 138.39 yen
Pound/dollar: DOWN at $1.2100 from $1.2131
Euro/Pound: UP at 86.02p from 85.82p
West Texas Intermediate: up 0.4 percent to $78.26 a barrel
North Sea Brent Crude: up 0.1 percent to $85.46 a barrel
New York – Dow: Closed for public holiday
London – FTSE 100: FLAT at 7,466.60 (close)