September 21, 2023

Asian equities are mixed on signs of slowing growth in the US and China

BANGKOK (AP) — Asian stocks got off to a slow start to the week, with mixed trading on Monday as China reported that wholesale prices fell in June amid other signs the economy is slowing.

Benchmarks rose in Hong Kong, Shanghai and Mumbai, but fell in Tokyo and Sydney. US futures and oil prices fell.

The 5.4% fall in producer prices in June from a 4.6% fall in May points to a further weakening in demand across many industries as activity slows in the world’s second-largest economy. And growth in the US and Europe is also slowing amid a barrage of interest rate hikes designed to quell inflation.

China’s economy has slowed faster than hoped after an initial pick-up in growth as the country recovered from disruptions caused by the COVID-19 pandemic.

Markets in China generally react positively to signs of weakness ahead of possible stimulus measures that could make more money available for equity investments.

Hong Kong’s Hang Seng gained 0.8% to 18,510.77 and the Shanghai Composite index rose 0.2% to 3,202.06.

The Nikkei 225 in Tokyo fell 0.8% to 32,126.15, while the Kospi in Seoul lost 0.1% to 2,525.85. The Australian S&P/ASX 200 fell 0.3% to 7,018.30.

India’s Sensex rose 0.2%, while Bangkok’s SET fell 0.1%.

As expected, US Treasury Secretary Janet Yellen completed a visit to Beijing to mend the fence without major deals or breaches in strained ties. But Yellen said relations were on a “certain basis” and the two sides would continue to talk despite disputes over many issues, including access to advanced technologies, Chinese territorial ambitions and allegations of human rights abuses.

On Friday, Wall Street drifted to a mixed end after data suggested the US job market is still warm enough to keep the economy growing, but perhaps not so hot as to drive inflation much higher. U.S. employers added 209,000 jobs last month, a slowdown from hiring of 306,000 in May.

Wage growth remained stable last month, instead of slowing down as expected by economists, for example. While workers would rather have the reported 4.4% increase in median hourly wages from a year earlier than the 4.2% predicted, Wall Street fears the Fed will view excessive wage growth as an upward pressure on inflation.

“Job growth is slowing. Not surprising at all given the massive layoffs taking place across the country,” ACY Securities’ Clifford Bennett said in a comment. “Basically, while job growth is slowing, it’s not enough to satisfy the Fed by a large margin.”

The S&P 500 lost 0.3% to 4,398.95, although slightly more stocks rose than fell within the index. The Dow Jones Industrial Average lost 0.6% to 33,734.88 and the Nasdaq composite fell 0.1% to 13,660.72.

The Russell 2000 index of smaller stocks rose 1.2%.

Much depends on whether the economy can walk the narrow path to avoid a long-predicted recession. It should continue to grow despite much higher interest rates set by the Federal Reserve to curb inflation.

Recently, the Fed hinted at perhaps two more hikes this year before keeping rates high to ensure inflation returns to its target of 2%. The broad assumption on Wall Street is that the Fed will raise rates at its next meeting in three weeks.

Government bond yields were mixed on the back of the much-anticipated jobs data. The 10-year Treasury yield rose from 4.05% late Friday to 4.07%. It helps set rates for mortgages and other important loans.

On other trading Monday, US benchmark crude fell 52 cents to $73.34 a barrel in electronic trading on the New York Mercantile Exchange. It added $2.06 to $73.86 a barrel on Friday.

Brent crude, the price base for international trade, was up 50 cents to $77.99 a barrel.

The US dollar rose from 142.17 yen to 142.82 Japanese yen. The euro fell from $1.0967 to $1.0958.

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