Asian stocks slide, dollar shines as recession fears deepen

CUE API | Updated on: Jul 06, 2022
A woman stands in front of a screen displaying Japan’s Nikkei share average, US and other stock market indicators outside a brokerage in Tokyo.

A woman stands in front of a screen displaying Japan’s Nikkei share average, US and other stock market indicators outside a brokerage in Tokyo. | Photo Credit: Issei Kato

Japan's Nikkei fell 0.88%; Hang Seng index was down 0.42%

TOKYO, July 6 Asian stocks slipped and the dollar stood by a two-decade high on the euro on Wednesday as investors' fears deepened that the continent is leading the world into recession, while oil and European equity futures attempted to steady after a slide.

Slowdown worries

Brent crude futures bounced 1.4% in morning trade to $104.18 a barrel, nursing its wounds after a 9.5% drop to a 2-1/2 month low on Tuesday with worries that a global growth slowdown is going to sap demand.

MSCI's index of Asia-Pacific stocks outside Japan fell 0.6%. Japan's Nikkei fell 0.88%, on course for its first loss of the week. S&P 500 futures fell 0.2%, though Euro STOXX 50 futures bounced 1.8%.

Hong Kong's Hang Seng index was down 0.42% while Chinese blue chips fell 0.7%, dragged by worries about new COVID-19 cases in Shanghai risking fresh restrictions.

Overnight Europe's STOXX 600 index dropped 2% and the euro plunged more than 1.5% to $1.0236, its lowest since late 2002 as talk of gas rationing spooked traders.

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Uncertainty over Europe's gas supply has set prices rocketing. Benchmark Dutch gas prices have doubled since the middle of June and rose 7% overnight to a four-month high.

Year-ahead baseload power in Germany hit a record high. Investors are nervous about continuity of supply after the Nord Stream pipeline, which carries Russian gas to Germany, shuts for ten days for maintenance from July 11.

In Tokyo, shares of commodities trading firms Mitsui & Co and Mitsubishi Corp dropped more than 5% after former Russian president Dmitry Medvedev threatened oil and gas supply cuts to Japan.

Sterling was also pinned by a two-year low and not helped by the latest political crisis to hit Prime Minister Boris Johnson's government, with the resignation of his finance and health secretaries questioning his longevity as leader.

After touching $1.1899 overnight the currency steadied at $1.1964 in Asia.

Gold steady

Spot gold was last steady at $1,771 an ounce after its overnight fall. Safe-haven gold is down about 3% this year, less than the steep losses for equities and bonds.

Investors now await the release of US payroll data on Friday for further signs of whether the economy may fall into a recession.

Benchmark US treasury yields were flat on Wednesday, with the 10-year note at 2.8218%.

Published on July 06, 2022
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