Global benchmarks mostly fall amid China concerns

By YURI KAGEYAMA
AP Business Writer

TOKYO (AP) — Global stocks mostly fell on Thursday on worries about the impact of China’s “zero-COVID” strategy mixed with hopes of a return to normal economic activity and the tourism.

France’s CAC 40 added 0.4% in early trading to 6,631.06. The German DAX rose 0.9% to 14,367.89. Britain’s FTSE 100 fell 0.3% to 7,328.30. US stocks were expected to drift higher with Dow futures up 0.3% at 33,694.00. S&P 500 futures rose 0.4% to 3,984.50.

Benchmarks fell in Tokyo, Seoul, Hong Kong and Shanghai, while gaining in Sydney. Oil prices have fallen.

Market watchers have noted concerns about how the Federal Reserve may not ease its aggressive interest rate hikes, which are aimed at curbing inflationary pressures. Much of the earlier market rally on Wall Street was due to such hopes, including lower inflation.

“Markets remain unconvinced that the US Fed will opt for smaller rate hikes as incoming data has sent mixed signals,” said Mizuho Bank’s Venkateswaran Lavanya.

US retail trade data showed improvement, while industrial production fell, underscoring the resilience of the service sector, as opposed to weakening external demand.

The Fed raised interest rates in a bid to slow the economy and rein in the highest inflation in decades. Wall Street feared it would brake too hard and cause a recession.

Japan’s benchmark Nikkei 225 fell 0.4% to end at 27,930.57. Australia’s S&P/ASX 200 gained 0.2% to 7,135.70 after government data showed the employment picture improved in October from September.

The South Korean Kospi slipped 1.4% to 2,442.90. Hong Kong’s Hang Seng fell 1.2% to 18,045.66, while the Shanghai Composite fell 0.2% to 3,115.43.

China is maintaining its “zero-COVID” approach of mass testing many people alongside localized lockdowns and quarantines to completely eliminate the coronavirus. These restrictions have caused a shortage of supply for some of Asia’s largest manufacturers, which has hurt economic growth.

Elsewhere, the lifting of pandemic-related restrictions has fueled hopes of increased consumer spending and tourism income.

Japan posted a trade deficit for the 15th consecutive month in October as imports and exports hit record highs amid soaring energy and food costs and a falling yen, the data shows. of the government published on Thursday.

The deficit, at 2.16 trillion yen ($15 billion), was the highest for the month of October since comparable data was first compiled in 1979, and came despite solid growth in exports, which rose 25.3% last month to 9 trillion yen ($64). billion) from a year ago. Among the products boosting exports are vehicles, medical products and electrical machinery, according to the ministry.

The latest US government retail sales report for October shows that consumer spending remains strong, although it is unclear whether this is due to more purchases or higher prices.

Strong consumer spending is generally a good sign for the economy, but it could make the Fed’s strategy to cool the economy more difficult.

The war in Ukraine is also weighing on market sentiment, particularly in the energy sector. Any worsening could cause spikes in the prices of oil, gas and other commodities the region produces.

In energy trading, benchmark U.S. crude fell 42 cents to $85.17 a barrel. US crude oil prices rose first, before falling 1.5% on Wednesday. Brent crude, the international standard, fell 11 cents to $92.75 a barrel.

In currency trading, the US dollar fell slightly to 138.98 Japanese yen from 139.51 yen. The euro traded at $1.0394, down from $1.0396.

___

AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.

___

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