Gold price

Asia markets tussle with inflation and rates concerns

Sep 23, 2022

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.04% higher, after U.S. stocks ended the previous session with negligible gains for the day. The index is down 3.6% so far this month.

Reuters

May 23, 2022 / 06:14 AM IST

Stocks bounced back from a sharp selloff at the start of the week tied in part to concerns over a default by China's Evergrande and its potential risk to global financial markets. (Representative Image)

Stocks bounced back from a sharp selloff at the start of the week tied in part to concerns over a default by China's Evergrande and its potential risk to global financial markets. (Representative Image)

Asian stocks faced an uncertain start on Monday as persistent inflation fears and the prospect of rising interest rates dogged the global economic outlook, which remains mired in negative sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.04% higher, after U.S. stocks ended the previous session with negligible gains for the day. The index is down 3.6% so far this month.

In early trade, Australian shares gained 0.2% while Japan's Nikkei stock index was 0.85% higher.

The yield on benchmark 10-year Treasury notes rose to 2.7883% from its U.S. close of 2.787% on Friday.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 2.5869%, up from 2.583%.

Uncertainty in market sentiment this week follows the SP 500's meagre gains on Friday of just 0.01%.

The Nasdaq declined 0.30% while the Dow Jones Industrial Average rose 0.03%.

Despite the marginal gains, the SP 500 and the Nasdaq recorded their seventh straight weeks of losses, the longest losing streak since the end of the dotcom bubble in 2001.

The Dow suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression.

Inflationary pressures remain top of mind for investors, given German wholesale inflation figures published on Friday showed a higher than expected jump indicating prices will remain elevated in the short term future.

Germany's producer price index for April rose 2.8% for the month, which meant annual growth was a persistently high 33.5%.

In Australia, the Labor Party ended a near 10 year rule of conservative government at a general election on the weekend

While Labor has promised climate, housing and enhanced social welfare reforms analysts do not believe the change in government will crate major implications for the nation's economy.

"In our view there was little proposed by the incoming government during the election campaign that at this stage requires us to revisit our economic forecasts," CBA economists wrote on Monday.

"Put another way, our economic forecasts and call on the RBA are unchanged despite the change of national leadership."

In early Asian trade, the dollar rose 0.04% against the yen to 127.9. It is still some distance from its high this year of 131.34 on 2022-05-09.

U.S. crude dipped 0.04% to $110.24 a barrel. Brent crude rose 0.23% to $112.68 per barrel.

The concerns over global economic growth has prompted renewed support for gold.

"Gold prices saw the first weekly gain since mid-April as safe haven demand was boosted by concerns over economic growth amid high inflation," ANZ analysts said in a research note on Monday. "A weaker U.S. dollar has also boosted investor appetite."

Spot gold was 0.3% higher early Monday at $1847.0226 per ounce.


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