Most Asian markets rise as global oil prices fall to pre-war levels in Ukraine

An electronic quotation board displays data from the Tokyo Stock Exchange (foreground) and the yen against the US dollar (R) at a currency brokerage in Tokyo on August 2, 2022. (Photo by Kazuhiro NOGI/AFP)

HONG KONG, China (AFP) – Asian stocks were mostly higher on Friday as oil prices plunge to pre-Ukraine war levels raised hopes that inflation will slow and the central bank will raise interest rates as attention shifts to key data on employment in the US later in the day.

However, while the markets have enjoyed a generally positive week, optimism remains worth its weight in gold as traders worry about issues such as the conflict in Eastern Europe, China’s military exercises over Taiwan and a possible global recession.

Oil has risen in price, but expectations that the economy will contract, weakening demand, have seen commodities fall more than 10 percent this week, with US data showing Americans are now driving less than in the summer of 2020 at the height of pandemics.

And while analysts are beating the recession drum, traders are emboldened by the possibility of a respite from the central bank’s tightening of monetary policy.

“The recent drop in oil prices, which are currently trading below levels immediately preceding Russia’s invasion of Ukraine, has contributed to market perceptions that inflation is likely to peak soon, taking pressure off the Fed to raise rates so aggressively,” it says. in a National post. Rodrigo Catril of Australia Bank.

(File photo) HOUSTON, TX – APRIL 1: A gas pump at a Shell gas station on April 1, 2022 in Houston, Texas. (Photo by Brandon Bell/GETTY IMAGES NORTH AMERICA/Getty Images via AFP)

Traders will now be keeping a close eye on the release of the important US jobs report later on Friday for a fresh snapshot of the world’s largest economy.

The Federal Reserve said its rate decision will be data-driven, and signs of economic weakness likely mean any hike will be marginal.

Officials said the economy remains healthy despite four decades of high inflation and soaring borrowing costs, while some have suggested they are open to larger increases to beat prices.

And Steven Innes of SPI Asset Management said: “While some high-frequency data suggests that employment and inflation are down in parts of the economy, markets may wonder if they are soft enough to reverse the Fed’s course.”

In a sign that there is a long road ahead, the Bank of England has raised rates by the most since it became independent in 1997 and warned that inflation is likely to top 13 percent while the UK suffers from a protracted recession.

Wall Street showed a slight advantage after the recent gains, but Asia was significantly higher.

Tokyo, Shanghai, Sydney, Seoul, Jakarta, Wellington and Singapore rose while Hong Kong and Manila fell.

Taipei is up more than two percent on easing fears over a conflict with Beijing, even as China is conducting its largest-ever military exercise around Taiwan in response to US House Speaker Nancy Pelosi’s visit this week.

On Thursday, China began a series of exercises in several areas, covering some of the world’s busiest shipping lanes.

While Taipei did not say where the missiles landed or whether they flew over the island, Japan said that of the nine missiles it found, four “allegedly flew over Taiwan’s main island.”

Geir Lode of Federated Hermes said: “For a world facing a number of major challenges, there is a lot of optimism about stocks right now.

“Inflation is challenging corporate earnings and putting pressure on consumer sentiment. A global recession seems likely as growth becomes increasingly meager. Geopolitical tensions and rising populism are accelerating the lockdown trend (and raising the risk of an even bleaker future). Climate change threatens all of us.

“And yet, stocks continued their strong July rally this week.”

– Key figures around 03:00 GMT –
Tokyo – Nikkei 225: up 0.7% to 28,131.87 (hiatus)

Hong Kong – Hang Seng Index: DOWN 0.1% to 20,145.45.

Shanghai – composite: up 0.1% to 3191.55.

EUR/USD: DOWN to $1.0233 from $1.0248 on Thursday.

Pound/Dollar: DOWN to $1.2139 from $1.2166.

Euro/pound: up 84.31p from 84.21p.

Dollar/yen: up 133.22 yen from 132.95 yen

West Texas Intermediate: up 0.4% to $88.87 per barrel

Brent North Sea oil: up 0.2% to $94.35 per barrel

New York-Dow: DOWN 0.3 percent to 32,726.82 (close)

London – FTSE 100: 7,448.06 (close)

© Agence France-Presse