Asian stocks extend losses as specter of recession looms

AP Business Writer

BANGKOK (AP) — Asian stocks fell on Monday, with Chinese markets posting moderate losses after reopening after a week-long holiday.

The declines followed another dismal weekend on Wall Street as a strong U.S. jobs report added to concerns that the Federal Reserve could view stronger-than-expected hiring data as evidence that the economy has not slowed enough to bring inflation under control. That could mean even bigger rate hikes that could make a recession more likely.

A US consumer price report on Thursday will be one of the main factors for markets this week. Investors are also awaiting the latest updates on how companies are coping with higher prices and interest rate hikes.

Markets were closed Monday in Tokyo, Taiwan and South Korea. The Hang Seng in Hong Kong fell 2.5% to 17,298.32 while the Shanghai Composite Index lost 0.4% to 3,012.58. Bangkok’s SET was down 0.6% and India’s Sensex was down 1.2%.

The dollar rose to 145.44 Japanese yen from 145.34 on Friday evening, adding to pressure on Japan’s central bank to counter the yen’s prolonged decline by adjusting its policy of keeping its benchmark interest rate below. zero to fight against deflation.

Prices rose in Japan, pushed up mainly by global inflation and soaring oil and gas costs, but the Bank of Japan stuck to its ultra-loose monetary policy while the Fed continued its sharp rate hikes. Higher expected yields pushed the dollar higher against the yen.

On Friday, the S&P 500 fell 2.8% to 3,639.66. It ended with a 1.5% gain for the week, its first weekly gain in four weeks. The Dow Jones Industrial Average slipped 2.1% to 29,296.79. The Nasdaq fell 3.8% to 10,652.40. The Russell 2000 Index fell 2.9% to 1,702.15.

The government’s report showing employers hired more workers last month than economists predicted could pave the way for the Fed to continue to aggressively raise interest rates, potentially triggering a recession if it is done too harshly.

Employers added 263,000 jobs last month. That’s a slowdown from July’s hiring pace of 315,000, but it’s still more than the 250,000 expected by economists.

Stocks have fallen more than 20% this year from record highs this year on worries about inflation, interest rates and the possibility of a recession.

Major indexes managed to register a gain for the week, thanks to a powerful but short-lived rally on Monday and Tuesday after some investors squinted hard enough on some weaker-than-expected economic data to suggest the Fed could take more time for rate hikes. . But Friday’s jobs report may have dashed those hopes of a Fed “pivot.” This is a pattern that has repeated itself several times this year.

By raising interest rates, the Fed hopes to starve inflation of the purchases needed to keep prices rising even further. The Fed has already seen some effects, with rising mortgage rates hurting the housing sector in particular. But if rate hikes go too far, it could push the economy into a recession. In the

Crude oil, meanwhile, posted its biggest weekly gain since March. Benchmark U.S. crude jumped 4.7% to settle at $92.64 a barrel on Friday. Brent, the international standard, rose 3.7% to $97.92.

Oil prices jumped as major oil-producing countries pledged to cut production to keep prices high. This should keep pressure on inflation, which is still near a four-decade high but hopefully moderating.

On Monday, the US benchmark fell 97 cents to $91.67 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude fell $1.02 to $96.90 a barrel.

Beyond higher interest rates, analysts believe the next hammer blow to equities could be a potential decline in corporate earnings. Businesses face high inflation and interest rates that eat away at their profits, while the economy slows.

The euro remained unchanged at 97.36 US cents.