Stocks fell across Asia on Wednesday morning, extending overnight losses on Wall Street amid concerns over recession, inflation and high oil prices. Which also boosted the safe-haven dollar. Japan’s Nikkei index fell 1.01% in early trading. While MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.1%, dragged lower by Australian sharesoff 1.29%, and Korea’s KOSPI, down 1.57%.
Asian shares had ended the previous session on a positive trajectory after China announced an easing of its quarantine requirements for inbound passengers. This in what some observers saw as the biggest relaxation so far of its “zero COVID” strategy. “Inevitably, markets overreact to these sorts of news,” said Carlos Casanova, senior economist at UBP in Hong Kong. Chinese blue chips (.CSI300) which hit a four week high the day before, lost 0.6% while the Hong Kong benchmark (.HSI) fell 1.3%.
The losses in Asia followed a turbulent day on U.S. markets, with the S&P 500 index down over 2% after data showed U.S. consumer confidence dropped to a 16-month low in June due to fears high inflation could cause the economy to slow significantly in the second half of the year.
Renewed worries over the potential for a global recession sent investors to the safe haven dollar, and the dollar index remained firm at 104.4.
The euro dropped 0.6% on the greenback overnight, and was little changed in early Asia at $1.0529. The Japanese yen stood at 136.03 per dollar, not far last week’s 24 year low of 136.7.
Oil prices fell back slightly after three sessions of gains, but global supply tightness underpinned the market. An overnight report suggested that Saudi Arabia and the United Arab Emirates cannot raise output significantly soon. Brent crude futures fell 0.53% on the day to $117.35 a barrel. U.S. crude was down 0.37% to $111.39. Spot gold rose slightly, gaining 0.15% to trade at $1,822.48 an ounce.