Thursday, July 25, 2024
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Asian markets drop after Wall Street retreat

SEOUL (AFP) – Asian markets dipped yesterday after a negative lead from Wall Street, with investors around the world worried about surging inflation.

Central banks in several major economies including the United States (US), Canada and Britain have already started raising interest rates to contain prices, but the European Central Bank on Thursday kept its stimulus plans and rates unchanged.

That sent the euro plunging to a near two-year low, but eurozone stocks were boosted while Wall Street retreated ahead of the Easter holidays.

The mood was subdued in Asia too, where only a handful of markets were open on Good Friday.

The Nikkei 225 closed 0.3 per cent lower with Wall Street’s woes depressing sentiment. Shanghai was down 0.7 per cent in afternoon trade.

Russia’s invasion of Ukraine has added to the uncertainty about the global economic recovery from the COVID-19 pandemic.

Traders at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP

This was reflected in statements from major banking executives in the US, who described the American economy as solid but warned about the impact of the Ukraine conflict and the measures central banks such as the US Federal Reserve will take to control inflation.

“We don’t think there’s going to be a recession,” chief equity strategist at Evercore ISI Julian Emanuel told Bloomberg television.

“We don’t think the Fed is going to break the glass. But the problem is investors aren’t in that mindset quite yet.”

Russia is a major global oil and gas supplier, and – along with Ukraine – is also a key player in the grain sector.

The conflict has shaken markets for these commodities, and the impact has been felt from the Middle East to South America.

In Yemen, there are fears of food shortages with the war-ravaged nation already on the edge of famine.

In Argentina, a strike by grain transporters has paralysed farming exports – haulers are unhappy with the rates they are paid, pointing to the spike in fuel prices because of the Ukraine crisis.

The war has sent oil prices soaring, with reports swirling about further energy sanctions on Russia.

Both main contracts have hovered above the USD100 per barrel mark in recent days.

“There are no surprises here as oil continues to march higher, with global supply shortage outweighing concerns about slower demand in China,” Stephen Innes of SPI Asset Management said in a note.