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Asian Stock Markets: https://tmsnrt.rs/2zpUAr4
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Nikkei climbs 0.8% to its highest level in 1 1/2 years vs. Nissan and Honda
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China and Hong Kong wobble; US stock futures rise
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US data bolsters confidence that the Fed is on pause and points to the risk of a slowdown
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Bank fears linger, PacWest is down 23%
By Stella Qiu
SYDNEY, May 12 (Reuters) – Most Asian stock markets were subdued on Friday and the dollar maintained gains on safe-haven flows after weak economic data from the US and China fueled concerns about a global slowdown, although Japanese stocks rallied achieved outperformance.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan slipped 0.2% and was heading for a 0.8% weekly decline, set on a raft of data out of China pointing to a sluggish economic recovery after the lifting of the COVID lockdowns.
However, Japan’s Nikkei rose 0.8% to its highest level since November 2021, buoyed by strong gains from Nissan and Honda. Nasdaq futures were up 0.3%, while S&P 500 futures were up 0.2%.
China’s blue chips slipped 0.1% in early trade, while Hong Kong stocks edged up 0.2%, helped by an 8% rise in e-commerce giant JD.com on its earnings growth and leadership changes.
China’s economic recovery appears to be losing momentum as bank lending fell sharply in April, consumer prices rose at their slowest pace in more than two years, and imports fell unexpectedly, prompting a plunge in commodity prices ranging from copper, iron ore to oil led.
Overall, data showed that US jobless claims rose to a 1 1/2 year high last week, while producer prices posted the smallest annual increase in more than two years, suggesting a potentially more abrupt slowdown in the largest economy the world suggests.
The data bolstered confidence that the Federal Reserve will almost certainly suspend rate hikes at its June monetary policy meeting, with futures markets continuing to price in about 78 basis points of rate cuts by year-end.
“It’s kind of a chaotic backdrop for equity and investment markets,” said Shane Oliver, chief economist at AMP in Sydney, citing weaker global growth and the return of banking worries.
“The silver lining is that inflationary pressures are easing, taking the pressure off central banks even as the Bank of England continues to hike interest rates.”
Bank fears echoed overnight. PacWest led further declines in regional banks with a sharp 23% drop overnight after the company reported a 9.5% drop in its deposits last week.
Shares in major US banks also fell after the US Federal Deposit Insurance Corporation (FDIC) said major lenders would bear the cost of replenishing their deposit insurance fund caused by recent bank failures.
That dragged the Dow lower, although the Nasdaq gained 0.2%, helped by a 4.3% gain in Alphabet Inc. on the launch of more artificial intelligence products.
Uncertainty about an increase in the US debt ceiling remains. A meeting between US President Joe Biden and senior lawmakers scheduled for Friday has been pushed back to early next week. The IMF warned that a US default would have a “severe impact” on the US economy.
The US dollar benefited from safe-haven flows amid growth and banking concerns, maintaining its 0.6% gain overnight at 102.05 against a basket of currencies.
The Chinese yuan hovered near a two-month low at 6.948 per dollar, while the pound sterling fell near a one-week low of $1.2515.
Government bond yields were slightly lower in Asia after longer-dated government bond yields fell further overnight on weak data. The benchmark 10-year bond was down 2 basis points at 3.373%, while the 2-year yield was down 3 basis points at 3.876%.
The Bank of England stuck to the script and raised interest rates by a quarter of a point to 4.5% on Thursday. However, it pledged that it would “stay on course” to curb the highest inflation of any major economy.
Oil licked wounds after it hit China. US crude futures edged up 0.1% to $70.96 a barrel, while Brent crude was little changed at $74.97 a barrel.
Gold prices fell 0.2% to $2012.12 an ounce.
(Reporting by Stella Qiu; Editing by Kim Coghill)
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