Investors await US November inflation data and next week’s Federal Reserve meeting
Yuki Iwamura
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Asian markets were mixed on Friday as optimism about China’s economic reopening continued to face concerns over rising interest rates and a possible recession.
With little catalyst on Thursday, traders had their sights set on the release of two major US inflation reports on Friday and Monday, as well as the Federal Reserve’s final policy meeting of the year.
In light of data showing that nearly a year of rate hikes has started to affect prices, the US central bank has announced a 50 basis point rate hike at its meeting, compared to four consecutive 75 point increases to date. It is widely expected to be announced.
However, the world’s leading economy remains resilient and concerns remain that the job market is too strong. That means the Fed may have to continue tightening monetary policy longer than expected.
The uncertainty has weighed on the US market, which has endured a tough December so far, with analysts warning of more pain.
“I think the worst is yet to come,” Gary Schlossberg of Wells Fargo Investment Institute told Bloomberg Television.
“We expect a mild recession next year, which means a modest decline in corporate profits is our target this year,” he said.
In Asia, especially Hong Kong, investor sentiment has been heightened by China’s decision to move away from a nearly three-year zero-Covid strategy of lockdowns and massive tests that have hit the economy.
After widespread protests across the country, leaders decided to slow down, fanning the excitement of accelerating growth as activity returns to normal.
Pledges to help the struggling real estate sector, which makes up a large part of the economy, were also boosting the economy.
Federated Hermes’ Silvia Dall’Angelo said: “This process will be gradual and gradual over the next year, as the population’s vaccination coverage is low and health systems are ill-prepared to deal with further surges in cases. It’s likely to be bumpy,” he said. Note.
“Reopening should gain momentum in the second half of next year, at which point China’s recovery is likely to accelerate, as the lifting of restrictions will allow fiscal and monetary stimulus to take effect. .”
JP Morgan strategist Marko Kolanovic added that he remains positive on China “with favorable financial conditions and an eventual full reopening and Covid end.”
Hong Kong rose along with Tokyo, Sydney, Seoul, Singapore and Taipei, while Shanghai, Wellington, Manila and Jakarta fell slightly.
Both major contracts fell more than 10% this week as oil prices rose again after falling sharply and hopes of a recession in the US and elsewhere weighed on demand expectations.
Tokyo – Nikkei 225: up 1.4% at 27,946.21 (break)
Hong Kong – Hang Seng Index: 19,498.04, up 0.3%
Shanghai – Composite: down 0.2% at 3,189.58
EUR/USD: Up to $1.0570 from $1.0560 on Thursday
Dollar/yen: 136.61 yen → 136.29 yen
GBP/USD: Rise from $1.2239 to $1.2255
EUR/GBP: fell to 86.22p from 86.24p
West Texas Intermediate: up 1.0% to $72.16 a barrel
North Sea Brent crude oil rose 0.9% to $76.82 a barrel
