Stock rally fizzles on revived inflation fears

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Stock rally fizzles on revived inflation fears

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(Reuters)-22/06/2022

Asian stocks fell altogether on Wednesday, failing to extend Wall Street rallies, as persistent concerns about interest rates and inflation remained the main focus of investors. rice field. Dollar.

MSCI’s Widest Non-Japanese Asia Pacific Equity Index It fell 1.39% at a low of more than five weeks, which was a hit on Monday, but still rose 1.02%.Nikkei in Tokyo I gave up my initial profits and stayed flat.

Investors continue to assess how worried the global economy needs to be as it seeks to curb the red inflation that accompanies rising interest rates.

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The US key equity benchmark rose 2% overnight, as the economic outlook may not be as dire as the S & P 500 was thought in a deal last week. It recorded the largest weekly decline since March 2020.

However, sentiment rises did not last long on S & P 500 and Nasdaq futures, both down nearly 1% on Wednesday, while EUROSTOXX 50 futures fell 1.3% and FTSE futures fell 0.9%.

“The rebound in the bear market after this recent holiday reflects the uncertainty that investors have about whether inflation and federal hawkish peaks have been seen,” said Invesco’s global market strategist. I think. ” David Chao in the Asia Pacific region.

“I think the global stock market could end higher than it is now at the end of the year, but market volatility is expected to continue until it becomes clear that the Fed will not force the US economy to shrink. To curb the rate of inflation. “

Chinese blue chips Hong Kong’s Hang Seng Index lost 0.44% South Korea’s KOSPI, down 1.24%.  It decreased by 1.82%.

Federal Reserve Chair Jerome Powell will begin testifying to Congress on Wednesday, and investors are looking for further clues as to whether another 75 basis point rate hike will take place in July. ..

Economists surveyed by Reuters predict that the Fed will raise rates by 75 basis points next month, then rise 0.5 percentage points in September and not shrink to a quarter percentage point until November in November. I am. The oldest.

Most other global central banks are in a similar situation, with the exception of the Bank of Japan, which promised to maintain its ultra-low interest rate policy last week.

The gap between Japan’s low interest rates and the U.S. high interest rates weighed on the yen, which hit a new low of 136.71 per dollar in early trading before it remained strong to 136.25 for the first time in 24 years. ..

The minutes of the Bank of Japan’s April policy meeting, released Wednesday, raised central bank concerns about the potential impact of a plunging currency on the country’s business environment.

Movements in other currencies became more modest on Wednesday, with the dollar index tracking a greenback against six peers and staying stronger at 104.62.

Benchmark US 10-year Treasury yields were fairly stable at 3.2617%.

Oil prices have fallen and US President Joe Biden was expected to demand a suspension of the federal tax of 18.4 cent gallons on gasoline on Wednesday, a source on the plan told Reuters.

Brent fell 3.37% to $ 110.79 a barrel and US crude fell 3.71% to $ 105.46.

Spot gold fell 0.32% and traded at $ 1,826.72 an ounce.

Bitcoin traded at $ 20,288 after falling 6.54% from Tuesday’s highs to $ 17,592 last week.