Asian stocks fall on bearish outlook amid Ukraine recession risk

A woman walks past an electronic screen showing the Shenzhen and Hang Seng stock indices, in Shanghai, China September 24, 2021. REUTERS/Aly Song

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SHANGHAI, April 1 (Reuters) – Asian stocks fell on Friday after the biggest quarterly drop in global stocks in two years as investors worried about the impact of the Russo-Ukrainian war and growing recession risks.

On Thursday, Russian President Vladimir Putin responded to Western sanctions against Moscow by threatening to suspend contracts that supply Europe with a third of its gas unless they are paid for in rubles. The move led Germany, the country most dependent on Russian gas, to accuse it of “blackmail” by activating an emergency plan that could lead to rationing. Read more

Reflecting the gloomy mood as a result of supply disruptions and rising raw material costs, Japanese business confidence hit a nine-month low in the first quarter according to a Bank of Japan survey, and business They indicated that they expect conditions to get even worse. Read more

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In Tokyo, the Nikkei (.N225) fell 0.75% in morning trading, while MSCI’s broader index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) it was 0.70% lower.

The Hang Seng of Hong Kong (.HSI) fell 1.1%, while Seoul’s Kospi (.KS11) lost about 0.6%. Chinese blue-chips turned around from a lower open to rise 0.7%.

MSCI Global Stock Index (.MIWD00000PUS)and US and European stocks posted their biggest quarterly declines since the outbreak of the COVID-19 pandemic in 2020 in the quarter ended March 31. potentially trigger recessions.

But the quarterly drop in US stocks masks a late comeback for the S&P500 index (.SPX), which recovered from a near 13% drop to end the quarter down around 5%, defying concerns about tighter monetary policy and global instability, and in contrast to signals sent by bond markets . Read more

“An apparent end to the Ukraine conflict would, in many respects, make it easier for the Fed to remain hawkish given the rebound in growth stocks and the related narrowing in credit spreads, signifying an improvement in financial conditions.” “said Christopher Wood, Asia and global equity strategist at Jefferies.

“Political pressure remains, at least for now, on the Fed to tighten.”

Investors will be watching US March employment data later on Friday for indications of wage inflation, in addition to the headline employment figure.

The closely watched spread between US 2-year and 10-year notes was just above zero on Friday morning, after briefly reversing.

An inversion in this part of the US yield curve is considered a reliable signal that a recession may follow in a year or two.

Benchmark 10-year notes last yielded 2.3781%, from 2.325% late Thursday, while the 2-year yield was 2.3648%, from 2.284%.

In energy markets, oil prices stabilized after a drop on Thursday triggered by Washington’s announcement that it would make the largest-ever release of US emergency oil reserves, as part of a extensive effort to control rampant inflation. Read more

While US crude was down 0.1% at $100.18 a barrel, global benchmark Brent crude was up 0.12% at $104.84.

The dollar, which has benefited from safe-haven flows and US rate hike expectations, held firm on Friday. Against a basket of peers, the dollar was up 0.08% at 98.396 and up 0.55% against the yen at 122.33.

The euro rose to $1.1069.

Gold was flat after its biggest quarterly gain in two years. Spot gold was last quoted at $1,937.05 an ounce.

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Information from Andrew Galbraith; Edited by Simon Cameron-Moore

Our standards: The Thomson Reuters Trust Principles.

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