Asian markets mixed ahead of Fed report, U.S. jobs data

Stocks rise in Hong Kong and Shanghai; Japanese markets closed

TAIPEI — Amid worries of a potential global recession, Asian stock markets were neutral on Tuesday ahead of reports on U.S. jobs.

Following a year in which global stock markets had steep falls, traders are concerned that the Federal Reserve and other central banks, which have hiked interest rates frequently to curb inflation, may now be willing to plunge the entire world into a recession.

According to Stephen Innes of SPI Asset Management, inflation may “stay far north of 3% by the end of 2023, simply too high for central bank comfort.”

The Hang Seng HSI, +1.84% in Hong Kong, and the Shanghai Composite Index SHCOMP, +0.88% both saw gains of 0.6% and 1.3%, respectively. Due to a holiday, Japanese marketplaces were closed. After South Korea’s 2022 exports dropped 9.5% from the previous year and the nation reported its largest trade deficit ever, the Kospi index in Seoul declined 0.2%.

Following a 1.1% drop in Australian home prices and a dip in an indicator of manufacturing activity, Sydney’s S&P/ASX 200 XJO, -1.31% declined 1.3%. Jakarta JAKIDX, +0.55% stocks rose as Singapore’s STI, -0.17% stocks fell. Due to a holiday, New Zealand’s markets were closed.

The most anticipated data items this week are the Fed’s minutes from its most recent meeting, which will be made public on Thursday. Traders will receive an update on how the U.S. central bank is feeling about the potential need for additional rate increases as a result.

It will be followed on Friday by information on US jobs. Forecasters anticipate a fall in monthly employment gains in December, which they think will persuade the Fed to scale down its expectations for more rate increases. However, Yeap Jun Rong of IG said in a research that the Fed has a “clear focus on keeping inflation under control,” which “may still leave price data as the major driver of market changes.”

Additionally, traders are anticipating corporate earnings reports in mid-January.

The goal of central banks worldwide is to quell inflation, which is reaching multi-decade highs in many nations. Russia’s invasion of Ukraine, which disrupted commodity markets and raised the price of wheat and oil, has made things worse.

After Wall Street’s benchmark S&P 500 index SPX, -0.25% ended 2022 down 19.4%, its largest fall since the 2008 financial crisis, U.S. financial markets were closed on Monday in observance of a holiday. According to S&P Dow Jones Indices, its stock value decreased by $8.2 trillion.

Market benchmarks in France and Germany ended the day higher

The Federal Reserve’s benchmark lending rate is now between 4.25% and 4.5%, up from nearly zero following seven increases in 2016. According to the U.S. central bank, it won’t be cut before 2024 and will reach a level of 5% to 5.25% by the end of 2023.

In the oil markets, the New York Mercantile Exchange’s electronic trading of benchmark U.S. crude CLG23, -0.59% saw a 20-cent loss to $80.06 per barrel. On Monday, it increased from $1.86 to $80.26. The benchmark price for international oil trading, Brent crude (BRNH23, -0.69%), dropped 26 cents to $85.65 per barrel in London. The previous session saw an increase of $2.45 to $85.91.

The dollar USDJPY, -0.13% fell from Monday’s 130.80 yen to 130.17 yen.

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