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Indian Morning Briefing: Asian Markets Decline

DJIA          30946.99   -491.27    -1.56% 
Nasdaq        11181.54   -343.01    -2.98% 
S&P 500        3821.55    -78.56    -2.01% 
FTSE 100       7323.41     65.09     0.90% 
Nikkei Stock  26746.33   -303.14    -1.12% 
Hang Seng     22186.18   -232.79    -1.04% 
Kospi          2380.72    -41.37    -1.71% 
SGX Nifty*    15678.00   -164       -1.04% 
*Jul contract 
USD/JPY   136.10-11   -0.03% 
Range     136.22   135.90 
EUR/USD   1.0527-30   +0.07% 
Range     1.0537   1.0518 
CBOT Wheat July   $9.212 per bushel 
Spot Gold   $1,819.33/oz  Unch. 
Nymex Crude (NY)    $111.62      $2.05 

U.S. stocks slumped, giving up early gains and falling for a second consecutive day as investors parsed fresh economic figures for clues about the pace of monetary-policy tightening.

The Dow Jones Industrial Average dropped 1.6%, erasing an earlier gain of 1.4%. The S&P 500 lost 2%, while the technology-focused Nasdaq Composite Index fell 3%.

Stocks lost their early momentum after data from the Conference Board showed consumers' short-term outlook for the U.S. economy dropped sharply to its lowest point in nearly a decade.

Weak economic readings fueled a stock market rally last week as investors hoped the Federal Reserve might slow its monetary-policy tightening, in a paradoxical outlook where bad news was good news. However, the consumer reading is "bad news that's bad news," according to Mike Mullaney, director of global markets research at Boston Partners.

"If you have inflation expectations going up to the extent they are right now, it just means the Fed is going to be that much more aggressive in squashing inflation," he said.


Japanese stocks were lower in morning trade, dragged by falls in semiconductor-related stocks amid continued concerns about higher costs of raw materials and the economic outlook. Investors are focusing on the yen and crude-oil prices, as well as economic data. USD/JPY was recently at 136.10, compared with 135.40 as of Tuesday's Tokyo stock-market close. The Nikkei Stock Average was down 0.8% at 26838.34.

South Korea's Kospi fell 1.2% to 2391.11, tracking Wall Street's declines overnight. Auto, shipping and airline stocks led the retreat. The local index is under increasing profit-taking pressure after a three-session winning streak, Kiwoom Securities said in a note.

Hong Kong stocks fell, with the benchmark Hang Seng Index down 0.8% at 22246.85, tracking declines on Wall Street. Broad-based losses in U.S. markets are leading to a cautious mood in the Asian session, IG market strategist Yeap Jun Rong said in a note. "Underperformance in U.S. growth sectors may have a knock-on impact on tech companies in the region as well," he said. Technology stocks were also lower, with the Hang Seng Tech Index falling 1.0% to 5052.17.

Chinese stocks declined, as losses among auto companies and miners of nonferrous metals more than offset property sector gains. Soochow Securities said in a note that some Chinese stock indexes have risen to March levels after the recent rally and could witness some volatility. The Shanghai Composite Index lost 0.2% to 3402.38, the Shenzhen Composite Index fell 0.4% and the ChiNext Price Index was 0.4% lower.


Asian currencies were mixed against USD, but may weaken as Wall Street's losses overnight spur risk-off sentiment. Asia ex-Japan currencies seem to be under pressure on spillover effects from last night's decline in U.S. equity markets, said MUFG Bank currency analyst Sophia Ng in a research report. Weaker-than-expected U.S. consumer confidence data released overnight fueled fears of a recession, and those fears are likely to have a greater impact on Asia ex-Japan currencies than positive news stemming from China's easing of Covid-19 restrictions, Ng added. USD/KRW fell 0.2% to 1,290.38, USD/SGD was little changed at 1.3875, while AUD/USD edged 0.1% higher to 0.6916.


Gold was little changed as investors weighed the probability of tightening monetary policy against the outlook for global economic growth, analysts from ANZ said in a note. Bullion prices could find support amid haven demand as geopolitical tensions threaten to heat up, the analysts said. Investors are also weighing up reports saying that the U.S., the U.K., Japan and Canada plan to announce a new ban on Russia gold imports, the ANZ analysts added. Spot gold was recently flat at $1,819.33 an ounce.


Oil rose as a tight supply outlook and the easing of quarantine rules in China supported prices. Crude output is likely to be constrained as Saudi Arabia and the UAE both seem to already be producing near capacity, while relaxation of China's quarantine rules could help spur demand, Oanda senior market analyst Craig Erlam said in a note. The tight supply picture could mean oil prices will stay elevated, and "it may well take a recession to return oil prices to sustainable levels any time soon," he said. Front-month Brent was 0.5% higher at $118.59/bbl; WTI gained 0.4% to $112.24/bbl.

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(END) Dow Jones Newswires

June 28, 2022 23:15 ET (03:15 GMT)

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