Inflation, rate woes drag shares anew

By Agence France-Presse and Manila Times

HONG KONG: Stock markets struggled on Tuesday on long-running worries over surging inflation and rising interest rates, which overshadowed hopes that China would ease off its regulatory drive against its beleaguered technology giants.

A spike in United States Treasury yields took the wind out of the proverbial sails for Wall Street, with the focus now on the release of US and Chinese inflation data at the end of the week.

Analysts are betting that the Federal Reserve (Fed) would lift borrowing costs by half a point at its next three meetings as officials try to get a grip on runaway consumer prices.

But that is causing discomfort on trading floors as investors fret over the impact on economic growth and firms' bottom lines.

"Inflation concerns are not going anywhere fast," Fiona Cincotta of City Index said. "Rising crude oil prices and a strong labor report have lifted bets that the Fed may need to act aggressively to rein in inflation."

      

SPI Asset Management's Stephen Innes said "investors are hyper-focused on inflation, economic growth and future Fed policy."

Most, he added, "assume the worst and think a financial tsunami [would] hit the US and global markets, thanks to the quorum of US-based bank CEOs (chief executive officers) that have given the gloomy growth narrative their imprimatur. Anything less than that outcome is going to surprise a lot of folks."

Equity markets were mixed in Asia and Europe.

Tokyo rose, helped by a softening of the yen to a two-year low owing to expectations that the Bank of Japan would not tighten monetary policy just as US rates climb.

Shares mixed as chances for rate increases grow

Manila and Jakarta also edged up, but there were losses in Seoul, Singapore, Mumbai, Bangkok, Wellington and Taipei.

Sydney dropped more than 1 percent after the Australian central bank announced a bigger-than-forecast half-point rate hike to quell inflation.

Hong Kong fell and Shanghai ticked slightly higher, even as heavyweights Alibaba and JD.com led a rally among tech firms following a report that China was close to ending a painful crackdown on ride-hailing app Didi Global and restoring its main apps this week. Didi's US-listed notes soared more than 20 percent.

The Wall Street Journal said probes into two other firms — Full Truck Alliance and recruitment platform Kanzhun — were fanning optimism for the sector's outlook after a long period of hefty selling pressure.

Stocks mixed as inflation, rate woes temper rally

"This was seen as a signal that the regulatory crackdown on Chinese tech firms was starting to end... as China focuses on stabilizing the economy following Covid restrictions," National Australia Bank's Tapas Strickland said.

London was flat in early trade, but Paris and Frankfurt fell.

Markets have seen some leveling out in recent weeks as the easing of restrictions in China helps to offset some of the worries about higher rates and the impact of Russia's invasion of Ukraine.

US tech rout, China data drag markets

But market-watcher Louis Navellier warned there was still plenty more volatility to come.

"If history repeats, we could be down tomorrow, then up on Wednesday, then down on Thursday and possibly up on Friday," he said in a commentary.

"So just get used to these up-down, up-down oscillations because they are going to continue," he added.

"I want to remind investors to not get too excited when the market rallies because it is going to continue to oscillate. There is just too much uncertainty out there."