BANGKOK — Stock prices were mixed in Asia on Friday after China reported its economy contracted 2.6% in the last quarter as virus shutdowns kept businesses shuttered and people at home.
Tokyo’s Nikkei 225 added 0.6% to 26,797.47. The Kospi in Seoul rose 0.1% to 2,324.29 and shares also rose in India and Taiwan.
The Shanghai Composite lost 0.2% to 3,273.87. S from Australia&P/ASX 200 fell 1.1% to 6,578.50 and the Hang Seng in Hong Kong fell 0.7% to 20,597.14.
Official data shows China’s economy shrank 2.6% from the already weak quarterly rate of 1.4% in the January-March period. Compared to a year earlier, which may mask recent fluctuations, growth slipped to a weak 0.4% from 4.8% in the previous quarter.
Virus checks shut down Shanghai, site of the world’s busiest port, and other manufacturing hubs from late March, fueling fears that global trade and manufacturing could be disrupted. Millions of families have been confined to their homes, which has weighed on consumer spending.
Other outbreaks this week in China and elsewhere in Asia have raised fears that COVID-19 controls may be reinstated, on top of existing precautions.
Thursday on Wall Street, the S&P 500 fell 0.3% to 3,790.38. Nearly three out of four stocks in the benchmark ended in the red. The Dow Jones Industrial Average fell 0.5% to 30,630.17. The Nasdaq rose less than 0.1% to 11,251.19.
Shares of small companies fell more than the broader market in another signal that investors are worried about economic growth. The Russell 2000 fell 1.1% to 1,707.51.
Banks suffered some of the largest losses and weighed heavily on the market. JPMorgan Chase fell 3.5% after reporting a sharp decline in earnings for its latest quarter, below forecasts. CEO Jamie Dimon stuck to his warning earlier this summer that a “hurricane” could be heading for the economy.
“I haven’t changed my mind at all,” he said in a conference call with reporters. “The negatives that I pointed out, the risks in the future, are still the same risks. They are closer than they were before.
Wall Street assessed the latest government reports showing that inflation remains high and shows no signs of slowing, even as central banks try to loosen their grip on businesses and consumers by raising interest rates.
Inflation and the Federal Reserve’s fight against it remain major concerns for investors. Wholesale trade inflation rose 11.3% in June from a year earlier. It’s the latest painful reminder that inflation is on the way, after a report on Wednesday showed consumer-level prices were 9.1% higher last month than a year earlier.
Widespread inflation has weighed on businesses and consumers for months, and the Federal Reserve has moved aggressively to try to lower prices by raising interest rates. This raised fears that it could go too far and actually cause a recession.
But markets have been preparing for it for months, buying on dips and looking for silver linings.
“Amid the gloom, buyers are looking for pockets of optimism. Forecasts from major US banks for economic conditions point to an impending slowdown, but come with some downplaying of the risks of a severe US recession. with strength in consumer spending and the labor market,” IG’s Jun Rong Yeap said in a report. .
The 10-year Treasury yield, which affects mortgage rates, was 2.94% early Friday. It remains below the two-year Treasury note, which is at 3.12%. It’s a relatively rare event, and some investors believe it portends a potential recession.
The Fed has already hiked rates three times this year and traders are increasingly expecting a monstrous one percentage point rate hike at the next central bank meeting in two weeks. Traders are betting on a 44% chance of a full point rise, up from zero a month ago, according to CME Group.
Christopher Waller, a member of the Federal Reserve Board of Governors, said Thursday that he would be willing to back such a move if upcoming economic data points to robust consumer spending.
Investors will have a clearer picture in the coming weeks of the impact of inflation on businesses. Several other banks are on deck to release their results on Friday, including Citigroup and Wells Fargo, as well as insurer UnitedHealth Group.
In other trading on Friday, benchmark U.S. crude oil gained 65 cents to $96.44 a barrel. It lost 52 cents to $95.78 a barrel on Thursday.
Brent crude, the pricing basis for international trade, added 90 cents to $100.00 a barrel.
The US dollar fell from 138.94 yen to 139.05 Japanese yen. Rising US interest rates continued to push the dollar higher against other major currencies in countries where rates either failed to rise or lagged Fed hikes.
The euro fell from $1.0020 to $1.0027.
AP Business Writer Joe McDonald in Beijing contributed.
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