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Wednesday, November 30, 2022

Oil surges above $120 as Asian stocks fall, yen sinks

TOKYO ( Associated Press) – Shares in Asia were mostly lower on Thursday as investors saw fresh signs of inflation and crude prices edged above $122 a barrel, adding pressure to prices.

Benchmarks fell across the region, except in Tokyo, where a weaker yen sent issues from some Japanese exporters higher. Nintendo Company issues rose 1.9% in afternoon trading, while shares of Honda Motor Company were up more than 0.9%.

The Japanese yen recently hit a fresh 20-year low against the US dollar, a trend that the International Monetary Fund and other analysts expect to continue for some time due to higher interest rates in the US and Europe compared to Japan. Where long-term interest rates are expected to remain near zero.

The dollar was trading at 133.80 Japanese yen after reaching a level of 134 yen earlier in the day, down from 134.20 yen late on Wednesday. Euro price is $1.0721, up from $1.0718.

The Governing Council of the European Central Bank is holding a monetary policy meeting later in the day. Comments from the European Central Bank chief Christine Lagarde have fueled fears that markets will hike interest rates in July, with more to follow.

Nevertheless, the economic recovery remains fragile and subject to risks from geopolitical risks, reduced real income, supply chain constraints and limited fiscal support, said Venkateswaran Lavanya of the Asia and Oceania Treasury Department at Mizuho Bank in Singapore. ”

“To that end, the ECB would not want to throw the child out with the bathwater; Calibrating monetary tightening in a more sustained, albeit slow, motion,” she said in a commentary.

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Japan’s benchmark Nikkei 225 rose 0.2% to 28,290.06 in afternoon trade. Australia’s S&P/ASX 200 slipped 1.2% to end at 7,037.10. South Korea’s Kospi fell 0.4% to end at 2,616.46. Hong Kong’s Hang Seng was down 1.0% at 21,788.94, while the Shanghai Composite was down 1.1% at 3,228.08.

Inflation has worsened since Russia’s invasion of Ukraine, which has put more pressure on energy and food prices. US crude oil prices rose 2.3% on Wednesday and were up 63% for the year, while wheat prices rose 39% in 2022. The supply chain has also tightened after a series of lockdowns for Chinese cities fighting COVID-19 cases.

Benchmark US crude rose 29 cents to $122.40 a barrel in energy trading. It gained $2.70 on Wednesday. Brent crude, the international standard for oil pricing, rose 35 cents to $123.93 a barrel.

More inflationary pressures from conflict in Ukraine and lockdown in china Organization for Economic Co-operation and Development pushed to cut its forecast for economic growthSeveral other international groups, including the World Bank, are following.

Treasury Secretary Janet Yellen testified before the Senate Finance Committee on Tuesday that she expects inflation to remain high And reducing it is a top priority. The Fed is widely expected to raise its key short-term interest rate by half a percentage point at its meeting next week. It will be the second straight increase of double the normal amount, and investors expect a third in July.

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Stocks fell widely on Wall Street, wiping out most of their gains for the week, as investors were discouraged to see more evidence of the impact of inflation on businesses and a more gloomy outlook on the global economy.

The S&P 500 index fell 1.1% to 4,115.77. The Dow Jones Industrial Average fell 0.8% to 32,910.90 and the Nasdaq slipped 0.7% to 12,086.27.

Shares of the smaller company declined more than the rest of the market. The Russell 2000 fell 1.5% to 1,891.01.

Bond yields rose. The yield on the 10-year Treasury, which banks use to set rates on mortgages and other loans, rose to 3.02% from 2.97% late Tuesday.

The bigger concern on Wall Street remains rising inflation and whether the Federal Reserve’s move to aggressively raise interest rates will help offset the impact or possibly push the economy into recession.

The Fed aims to slow economic growth to reduce the effects of inflation. Through most of the post-pandemic recovery, demand for goods exceeded supply and production capacity. But investors worry that the Fed may be too quick to raise rates, pushing the US economy into recession.

The next big update on inflation comes on Friday, when the US government releases its latest readings on the Consumer Price Index.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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