Stocks rose in Asia on Monday following a rally on Wall Street

Stocks rose in Asia on Monday following a rally on Wall Street in response to data indicating US consumers remained resilient to surging inflation and higher interest rates, easing concerns about a possible recession.

Speculation that Saudi Arabia will lift oil production after Joe Biden’s visit last week also provided some relief as crude prices — a key driver of inflation in recent months — dropped, reports BSS.

  Learn about the COVID-19 pandemic from News Hour  

Still, investors continue to fret over the economic outlook with Russia’s war in Ukraine showing no sign of ending, China locks down cities to fight a new Covid flare-up and central banks quickly tighten monetary policy.

All three main indexes in New York raced higher on Friday after June retail sales came in above forecasts and banking giant Citigroup’s April-June results beat expectations.

While a strong set of economic data has of late boosted bets on the Federal Reserve lifting borrowing costs more, the latest figures were not seen as being big enough to warrant a sharper rate hike next week.

Market analysts widely expect the bank to announce a 75 basis point lift, though some have suggested a one percentage point increase could be on the cards.

Policymakers have made it clear their main goal is bringing inflation down from a four decade high, even if that stunts growth or even causes a recession.

“Overall the robust US data… eased concerns about an imminent recession but is also unlikely to mount an additional case for a 100 basis point Fed hike,” said SPI Asset Management’s Stephen Innes.

“And it was about as goldilocks of a mix of headline data risk as one could have expected given the Fed’s dilemma of balancing inflation versus growth.”

In early trade, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Jakarta and Wellington were all up. Tokyo was closed for a holiday.

However, uncertainty remains rife on trading floors, with a new spike in Covid cases in China causing concern that officials will impose fresh lockdowns in major cities including Shanghai and Beijing.

A two-month shutdown in Shanghai earlier this year hammered the world’s number two economy and severely hit global supply chains.

Lanzhou, the capital of northwestern Gansu province, has ordered its 4.4 million residents to stay home, while a county in Anhui province went into lockdown from Friday.

Beihai in the southern Guangxi region on Saturday also announced lockdowns in parts of two districts that are home to more than 800,000 people.

The expected blow to demand from the world’s top crude importer has weighed on prices of the commodity, with both main contracts giving up most of the gains seen after Russia’s invasion of Ukraine.

Adding to downward pressure on oil is speculation Saudi Arabia will lift production after Biden’s visit, during which he called on the kingdom to help ease the price pressure that has sent inflation rocketing.

SPI’s Innes added that with a deal between OPEC and other major producers ending soon, output could see a big rise.

“As long as the agreement is in effect, Saudi Arabia has made it transparent that individual producers with spare capacity should not exceed their quota to offset underproduction elsewhere within the group.

“From October, however, this changes.”

Meanwhile, Libya is set to see a boost to output as months of outages come to an end, while the lifting of US sanctions on Venezuela could lead to a return of capacity from the South American country.

Follow News Hour

This article has been posted by a News Hour Correspondent. For queries, please contact through [email protected]
No Comments
Contact News Hour
Join the mailing list of News Hour now

Translate this News

Join the Facebook Group

Click here to join the Facebook group of News Hour

Popular Posts

Youth urged for intergenerational solidarity tackling climate catastrophe
UK expects to take delivery of a shipment of gas from Australia next week
Elon Musk tweets he is 'buying Manchester United'
Depriving girls of secondary education translates to a loss of at least US$500 million for Afghan economy in last 12 months
Bolsonaro, Lula to launch campaigns in Brazil
China denied responsibility for a rocket set to slam into the Moon


Contribute to News Hour

News of the Month

July 2022