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Indian Morning Briefing : Asian Markets Mixed After Powell Testimony

06/22/2022 | 11:16pm EDT
DJIA            30483.13    -47.12    -0.15% 
Nasdaq          11053.08    -16.22    -0.15% 
S&P 500          3759.89     -4.90    -0.13% 
FTSE 100         7089.22    -62.83    -0.88% 
Nikkei Stock    26155.62      6.07     0.02% 
Hang Seng       21131.43    123.09     0.59% 
Kospi            2340.23     -2.58    -0.11% 
SGX Nifty*      15416.50      19.5     0.13% 
*June contract 
USD/JPY    135.29-30    -0.70% 
Range      136.26   135.29 
EUR/USD    1.0570-73    +0.03% 
Range      1.0583   1.0556 
CBOT Wheat July $9.764 per bushel 
Spot Gold  $1,835.52/oz  -0.1% 
Nymex Crude (NY) $105.41  -$4.11 

U.S. stocks edged lower after Federal Reserve Chairman Jerome Powell acknowledged that the central bank's rate-raising campaign could cause an economic downturn.

The S&P 500 was down 0.1%, while the Dow Jones Industrial Average and the tech-heavy Nasdaq Composite Index each slipped 0.15%. Mr. Powell said the central bank plans to continue raising interest rates until it sees clear evidence that inflation is slowing to its 2% target.

"Folks are really reckoning with the fact that probabilities of recession seem to be increasing," said Gavin Stephens, director of portfolio management at Goelzer Investment Management.


Japan's Nikkei Stock Average was 0.5% higher at 26261.76 in morning trade after opening lower, supported by gains in real-estate stocks. Economic growth concerns may linger after the U.S. Fed Chair said higher interest rates could cause a recession. Toyota declined 0.3% after lowering its global production plan for July by about 50,000 units. Snack company Calbee rose 5.7% after saying it plans to raise prices of some products due to higher raw-material costs.

South Korea's benchmark Kospi edged down 0.1% to 2340.34 in mixed early trade. Construction and shipbuilding stocks were higher, while shipping and airline shares fell. Investor sentiment, supported by bargain-hunting after a selloff in the prior session, was capped by Fed Chairman Jerome Powell's acknowledgement at a congressional hearing that the central bank's rate increases could cause a U.S. recession. USD/KRW gained 0.2% to top the 1,300 level for the first time in 13 years on risk aversion.

Hong Kong stocks were higher in morning trade, picking up after a steep selldown on Wednesday as the market fell under pressure amid rising worries over a U.S. recession. The benchmark Hang Seng Index was up 0.9% at 21190.90, recovering after suffering its worst one-day drop in more than a week during the previous session. But KGI Securities analysts continued to advise caution, pointing to a recent range-bound trading pattern, which is a sign of both weak investor sentiment and trading momentum. Car makers led gains after Beijing officials at a Wednesday meeting once again emphasized the importance of boosting auto consumption.

Chinese shares were higher in early trade, supported by gains in auto and bank stocks. The Shanghai Composite Index rose 0.2% to 3273.00, the Shenzhen Composite Index gained 0.3% to 2126.71 and the ChiNext Price Index advanced 0.8% to 2699.72. Investor sentiment may be supported by comments from China's finance minister on Wednesday saying the government will step up fiscal spending, Commerzbank analysts said in a note. "Further, there are also reports that banks are urged to increase funding support for infrastructure projects to help stabilize growth," they added.


The dollar weakened 0.5% against the euro and 0.3% against the yen, and the WSJ Dollar Index slipped 0.1%. Falling inflation won't stop central banks tightening the screws, Capital Economics analysts said in a forecast overview. CapEcon thinks inflation still seems set to fall, albeit from a higher level than envisaged before the war in Ukraine. "The global economy is on course for weaker growth, high inflation, and tighter monetary conditions. The world's largest economies will all suffer for different reasons ... higher interest rates will weigh on interest-rate-sensitive spending in the US." CapEcon expects higher bond yields, a strong dollar and some further drop in equities, with the "worsening risk environment, as well as aggressive tightening by the Fed to result in further U.S. dollar appreciation."


Gold prices were lower in early Asian trade, after U.S. Fed Chair Powell said ongoing interest-rate increases will be "appropriate." The precious metal may be supported by safe haven buying amid recessionary fears. "The threat of an economic downturn is likely to provide a floor to gold prices, despite central banks aggressively hiking rates to tame inflation," ANZ analysts said in a note. Meanwhile, Oanda puts resistance at $1,860 and support at $1,805. "I would need to see a couple of daily closes above $1,900.00 to get excited about a reinvigorated rally," Oanda's senior market analyst Jeffrey Halley said in a note. Spot gold was 0.1% lower at $1835.52/oz.


Oil prices were lower in early Asian trade on demand worries, as expectations of a recession continued to grow. While commodity indexes have been "super weak for a while," oil has been a bit of an outlier on the lower supply and higher demand outlook, SPI Asset Management's managing partner Stephen Innes said. "But I think it's a fallacy to think oil could stay this elevated given the amount of central bank-induced slowdown likely to be seen later in the year," he said in a note. The Fed and other inflation-fighting central banks want lower commodities, which is what they are explicitly trying to engineer, he added. Front-month WTI crude oil futures were 2.2% lower at $103.82/bbl, while Brent fell 2.0% to $109.50/bbl.

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Musk Calls Tesla's New Factories 'Gigantic Money Furnaces' 
Revlon Stock Surges After Bankruptcy Filing 
Rolls-Royce Offers $2,500 Payment to Workers as Inflation Bites 
NBCUniversal, Google Compete to Help Netflix Develop Ad-Backed Tier 
FDA to Order Juul E-Cigarettes Off U.S. Market 
Mars CEO to Retire, Hand Reins to Pet-Care Unit Chief 

(END) Dow Jones Newswires

06-22-22 2315ET

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