© Reuters. FILE PHOTO: A passerby walks past an electric screen showing stock price index of different countries outside a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issa Kato
Written by Stella Keough
SYDNEY (Reuters) – Most Asian stock markets fell on Friday, with the dollar holding on to gains from safe-haven flows after weak economic data from the United States and China added to fears of a global slowdown even though Japanese stocks outperformed.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2% and was headed for a weekly decline of 0.8%, weighed down by a string of data from China that indicated a slow economic recovery after the lifting of COVID lockdowns.
However, it rose 0.8% to the highest level since November 2021, helped by strong earnings for Nissan (OTC:) and Honda. Nasdaq futures were up 0.3% while they were 0.2% higher.
Chinese Commercial Bonds fell 0.1% in early trade although Hong Kong shares posted a small gain of 0.2%, boosted by an 8% jump in e-commerce giant JD (NASDAQ:). com on its earnings and leadership changes.
China’s economic recovery appears to be losing steam, as new bank loans fell sharply in April, consumer prices rose at the slowest pace in more than two years, and imports unexpectedly contracted, sending down commodity prices from iron ore to oil. or)
Overnight, data showed that US jobless claims jumped to a 1-1/2 year high last week, while producer prices rose by the lowest annual increase in more than two years, indicating the possibility of a more abrupt slowdown in the world’s largest economy.
The data added confidence that the Federal Reserve will almost certainly hold off on raising interest rates at its June policy meeting, with futures markets continuing to price in cuts of about 78 basis points by the end of the year.
“It’s a bit of a messy backdrop for the equity markets and the investment markets,” said Shane Oliver, chief economist at AMP (OTC:) in Sydney, pointing to weak global growth and resurgence of banking concerns.
“The silver lining on the cloud is that inflationary pressures are waning, which takes pressure off central banks, although the Bank of England continues to rise.”
Banking concerns reverberated overnight. Once again, PacWest led the declines in regional banks with a sharp drop of 23% overnight, after it reported that its deposits fell 9.5% last week.
Major US bank stocks also fell after the US Federal Deposit Insurance Corporation (FDIC) said that major lenders will bear the cost of replenishing the Deposit Insurance Fund due to recent bank failures.
That sent the Dow lower, although the Nasdaq added 0.2%, helped by a 4.3% jump in Alphabet (NASDAQ::) Inc. rolling out more artificial intelligence products.
Uncertainty about raising the US debt ceiling lingers. A meeting between US President Joe Biden and top lawmakers scheduled for Friday has been postponed to early next week, with the International Monetary Fund warning that a US default would have “serious repercussions” for the US economy.
The US dollar benefited from safe-haven inflows amid growth and banking concerns, holding on to gains of 0.6% overnight at 102.05 against a basket of currencies.
The pair hovered near a two-month low of $6.948 per dollar, while the pound suffered losses close to a one-week low of $1.2515.
Treasury yields eased slightly in Asia, after long-term yields fell further overnight on weak data. The benchmark 10-year note was down 2 basis points at 3.373%, while the 2-year note yield was down 3 basis points, at 3.876%.
The Bank of England stuck to the scenario by raising its main interest rate by a quarter of a percentage point to 4.5% on Thursday. However, it pledged that it would “continue the course” to curb the highest inflation rate of any major economy.
Oil was licking the wounds after it hit China. Futures rose 0.1% to $70.96 a barrel, while little changed at $74.97 a barrel.
Gold prices fell by 0.2%, to $2012.12 an ounce.