Asian markets, oil lower as recession fears, debt ceiling darken outlook

ASIAN shares were mostly lower Monday, May 15, 2023, dogged by persisting worries over a possible recession and the risk of a default on the US national debt. US futures and oil prices also fell.

Shares in Thailand fell after the country’s main opposition parties easily bested other contenders in an election result that fulfilled many voters’ hopes in a chance for change after nine years under a former coup-leading general. The Stock Exchange of Thailand was down 0.8 percent in early trading.

This week will bring major updates on the Chinese and Japanese economies. China’s faltering rebound from disruptions caused by limits on travel and other activities during the Covid-19 pandemic has raised worries that it won’t provide the sort of growth needed to offset slowdowns in other major economies.

“The sharp moderation in China’s economic surprise index since the start of the month suggests that economic data are turning in less optimistic than before, which puts some doubts on markets’ reopening bets,” Yeap Jun Rong, a market analyst at IG, said in a commentary.

Tokyo’s Nikkei 225 bucked the regional trend, gaining 0.8 percent to 29,611.52.

Hong Kong’s Hang Seng index added 0.1 percent to 19,654.68 and the Shanghai Composite index sank 0.9 percent to 3,241.58. Australia’s S&P/ASX 200 lost 0.2 percent to 7,241.70, while the Kospi in South Korea shed 0.2 percent to 2,470.15.

However, they also said financial systems have shown resilience despite recent failures of several banks in the US and Europe. No mention was made of the urgency of resolving a standoff between US President Joe Biden and Republican lawmakers over raising the debt ceiling to enable the Treasury to pay its bills.

Friday, May 12, brought a quiet close on Wall Street despite the big worries roiling under the surface.

The S&P 500 dipped 0.2 pecent to 4,124.08, capping a sixth straight week where it moved less than one percent. The Dow Jones Industrial Average slipped less than 0.1 percent to 33,300.62, while the Nasdaq composite lost 0.4 percent to 12,284.74.

Despite seemingly placid moves for the overall market, big swings have swirled underneath the surface amid worries about a possible recession, high inflation and the US government inching toward what could be a catastrophic default on its debt.

A preliminary survey by the University of Michigan released Friday showed sentiment among consumers tumbling. That’s a worry because strong consumer spending has been one of the main forces preventing a recession as the economy slows.

President Joe Biden and congressional leaders postponed a meeting set for Friday on the debt limit crisis to next week. The delay was billed as a sign of positive exchanges, and staff-level talks continued through the weekend.

PacWest Bancorp’s stock fell three percent. It’s been under heavy scrutiny as Wall Street hunts for the next possible US bank to fail following three high-profile collapses since March. Its stock lost 21 percent last week.

Surging interest rates have caused some customers to pull bank deposits in search of higher yields while also dragging down prices for the investments that the banks hold.

The Federal Reserve has been hiking interest rates to drive down inflation. Recent reports suggest price increases are moderating though inflation remains too high for the comfort of households and regulators.

The hope on Wall Street is that easing inflation may convince the Fed to hold off on raising rates again at its next meeting in June. That would offer some breathing room to both the economy, which has slowed under the weight of higher rates, and to financial markets, where prices began falling long ago.

In other trading Monday, US benchmark crude oil gave up 47 cents to $69.57 per barrel. It lost 83 cents on Friday to $70.04 per barrel.

Brent crude, the pricing basis for international trading, shed 53 cents to $73.64 per barrel.

The US dollar rose to 136.21 Japanese yen from 135.69 yen on Friday. The euro was trading at $1.0858, up from $1.0854. / AP