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Asian stocks are falling due to inflation and recession fears, while oil prices are falling

Image: Reuters Berita 24 English - Investor concerns about soaring inflation and the danger of recession weighed heavily on Asian stock mar...

Image: Reuters

Berita 24 English - Investor concerns about soaring inflation and the danger of recession weighed heavily on Asian stock markets on Thursday, while oil prices dipped following Saudi Arabia's promises about production.

Brent crude was trading at $113.86 a barrel, down more than 2% on the day, ahead of a conference of oil-producing countries later in the day, which is likely to pave the way for increased supply. 

Crude oil in the United States fell more than 2% to $112.55 per barrel.

The slump in oil prices accelerated after the Financial Times reported that Saudi Arabia would be willing to increase oil supply if Russia's output drops dramatically.

"This will be well greeted by Western governments," said Matt Simpson, senior market analyst at City Index in Sydney, "provided inflation – and inflation expectations – remain eye-wateringly high, as central banks strive to hike rates at the risk of pushing their economies into a recession."

"More supply effectively calms some of those inflationary anxieties, even if there is still a lot of work to be done in terms of combating inflation."

Investors' concerns about inflation and recession have grown as a result of uncertainty surrounding the pace of interest rate hikes by the US Federal Reserve, the impact of the Russia-Ukraine conflict on food and commodity prices, and supply chain constraints exacerbated by China's strict COVID-19 restrictions.

A poll released on Wednesday that showed stronger-than-expected manufacturing activity in the United States in May did little to allay such fears. The issues facing the US economy have been compared to a "storm" by Jamie Dimon, chairman and CEO of JPMorgan Chase & Co.

Details of the poll showed price signals "remain consistent with exceptionally strong inflationary pressures" and negative employment growth in the industrial sector, according to Rodrigo Catril, senior FX analyst at NAB.

"Because the services sector is the largest employer in the United States, it will be critical to observe what the Services ISM reports on Friday," he said.

The latest evidence of global manufacturing concerns, a fresh survey of South Korean factory activity released on Thursday, indicated decreasing growth in May as import and export orders decreased.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 1% in early session. The blue-chip index in China was down 0.45%, Australian shares were down 0.90 percent, and Seoul's KOSPI was down around 1%.

The Nikkei fell 0.26 percent in Tokyo.

The Asian changes followed overnight weakness on Wall Street, with the Dow Jones Industrial Average falling 0.54 percent, the S&P 500 falling 0.75 percent, and the Nasdaq Composite falling 0.72 percent.

The dollar was boosted by higher US manufacturing statistics, which did little to raise US stocks. [FRX/]

The global dollar index remained unchanged at 102.56 in Asian trade, while the yen firmed slightly to 130.05 per dollar as US rates fell from week highs, while the euro rose 0.05 percent to $1.0651.

The benchmark 10-year Treasury note yielded 2.9149 percent at the time of writing, down from 2.931 percent on Wednesday, while the two-year yield fell to 2.6517 percent from 2.664 percent.

After hitting a two-week low on Wednesday, gold prices were held stable by reduced rates. At $1,845.08 per ounce, spot gold was hardly changed. [GOL/]

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