Global shares decline ahead of Fed report
US Fed is not sure of its next move, as swaths of economy have shown sharp slowdowns, but job market remains largely resilient; Shanghai and Hong Kong ended lower, while Tokyo in the green; European markets were trading in the negative territory; The US markets ended on a mixed note on Monday
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Tokyo: Global shares mostly fell Tuesday as investors took a wait-and-see view on the week ahead, including stubbornly high inflation across the economy. Data showing lagging imports in China sent Chinese benchmarks lower. Oil prices fell. France's CAC 40 slipped 0.4 per cent in early trading to 7,412.85. Germany's DAX inched down 0.1 per cent to 15,938.15. Britain's FTSE 100 fell 0.2 per cent to 7,762.54. US shares were set to drift lower with Dow futures dipped 0.3 per cent to 33,599.00. S&P 500 futures were down 0.2 per cent to 4,143.00. Japan's benchmark Nikkei 225 gained 1.0 per cent to finish at 29,242.82. But other regional benchmarks fell. Australia's S&P/ASX 200 slipped 0.2 per cent to 7,264.10. South Korea's Kospi shed 0.1 per cent to 2,510.06. Hong Kong's Hang Seng lost 2.1 per cent to 19,867.58, after new data on China's trade showed declining imports. The Shanghai Composite dropped 1.1 per cent to 3,357.67.
Chinese exports grew 8.5 per cent in April, showing more unexpected strength despite weakening global demand, according to customs data. Exports grew to $295.4 billion compared with a year earlier, although at a slower pace, building on momentum seen in the March data when exports rose 14.8 per cent. But imports shrank at a faster pace, with the total slumping 7.9 per cent to $205.2 billion compared to the same time last year, according to data Tuesday from the General Administration of Customs. It was down 1.4 per cent in March. Trade with the US and European Union showed a contraction in comparison with last year. China's trade surplus in April widened, growing 82.3 per cent compared to the same period last year. “Asian equities traded sideways on Tuesday after US stocks traded within a tight range, remaining mostly unchanged in volatile trading, as investors reacted to the mixed response to the Fed's senior loan officer survey,” said Anderson Alves, analyst at ActivTrades. “The survey showed a tightening of credit availability, impacting companies' margins and signaling an imminent economic slowdown.” Anderson added.
The larger concern for markets is that all the turmoil could cause US banks to pull back on their lending. That in turn could raise the risk of a recession that many investors already see as highly likely. A report Monday from the Federal Reserve showed many banks tightened their lending standards during the first three months of the year. Not only that, the survey suggested banks widely expect to raise their standards over the course of 2023. Among the reasons some smaller and mid-sized banks gave for the forecast were wanting to take less risk and worries about deposit outflows.
