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Global shares mixed as inflation weigh on growth

TOKYO (AP) – Shares declined yesterday in Europe after an upbeat session in Asia, while Wall Street futures slipped ahead of the re-opening of United States (US) markets from the Independence Day holiday. Benchmarks also fell in Paris, London, Frankfurt and Shanghai. But stocks gained in Tokyo, Seoul and Hong Kong.

The war in Ukraine and its impact on energy supplies are casting a shadow over the global economic outlook at a time when central banks are raising interest rates to slow inflation.

The International Energy Agency said in a report yesterday that high prices for natural gas and supply fears due to the war in Ukraine will crimp economic activity, slowing the growth in demand in coming years.

The Paris-based agency forecast global demand for natural gas will rise by 140 billion cubic meters (bcm) between 2021 and 2025, less than half the increase of 370 bcm seen in the previous five-year period. It said the revised forecast is mostly due to expectations of slower economic growth rather than buyers switching from gas to coal, oil or renewable energy.

A recent report by Fitch Ratings said a technical recession in the region using the euro was increasingly likely due to disruptions in Russian gas supplies to Europe.

Germany’s DAX fell 1.1 per cent to 12,630.86 while the CAC 40 in Paris lost 1.2 per cent to 5,885.94. Britain’s FTSE 100 declined 1.3 per cent to 7,135.52. The future for the S&P 500 was 0.6 per cent lower while that for the Dow industrials fell 0.5 per cent.

German Chancellor Olaf Scholz gathered top employer and labour union representatives at his Berlin office on Monday to seek ways of addressing the impact of rising prices while preventing a spiral of inflation in Europe’s biggest economy.

Benchmarks in Asia were mostly higher on hopes for an easing of trade tensions between Beijing and Washington.

Japan’s benchmark Nikkei 225 added one per cent to finish at 26,423.47. South Korea’s Kospi jumped 1.8 per cent to 2,341.78. In Hong Kong, the Hang Seng gained 0.1 per cent to 21,856.85. The Shanghai Composite was little changed, losing less than 0.1 per cent to 3,404.03.

China’s Commerce Ministry said yesterday that Vice Premier Liu He spoke with Treasury Secretary Janet Yellen about coordinating economic policy between the two biggest economies and maintaining the stability of supply chains.

In a statement, it also said the Chinese side “expressed its concern over issues such as the removal of additional tariffs and sanctions imposed by the US on China and fair treatment of Chinese companies.” The two sides agreed to continue their discussions, it said.

Australia’s S&P/ASX 200 rose 0.3 per cent to 6,629.30 after the central bank lifted its benchmark interest rate for a third time in three straight months, changing the cash rate to 1.35 per cent from 0.85 per cent. The Reserve Bank of Australia’s half a percentage point rise yesterday was the same size as its June increase.

When the bank lifted the rate by a quarter percentage point at its monthly board meeting in May, it was the first rate hike in more than 11 years.

Global investors have been worried about surging inflation and the possibility that higher interest rates could bring on a recession in some economies. Minutes of the latest policy meeting of the Federal Reserve are due out today and could bring hints on future policy.

Meanwhile, a resurgence in COVID-19 infections in Europe, the US and parts of Asia is also looming, bringing the threat of a reversion to pandemic precautions.

In energy trading, benchmark US crude picked up 55 cents to USD108.98 a barrel. It gained USD2.67 last Friday to USD108.43 a barrel.