Asian Markets' Rally Fizzles as Rates, Inflation Fears Return

A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP
A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP
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Asian Markets' Rally Fizzles as Rates, Inflation Fears Return

A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP
A pedestrian walks past a stock indicator displaying the Nikkei 225 of the Tokyo Stock Exchange (C, top) and other world stock markets in Tokyo on 16 August 2021. AFP

Asian markets mostly fell Tuesday as investors struggled to maintain a recent rally while weighing central banks' inflation-fighting rate hikes and the possibility of a recession.

Renewed concerns about thinning supplies and rising demand also helped push oil even higher, after enjoying a big bounce Monday, said AFP.

Shares rallied last week as the prospect of a contraction saw traders lower their bets on how long finance chiefs will tighten monetary policy, with some commentators eyeing possible cuts at the back end of 2023.

But the global advance fizzled Monday in New York, and on Tuesday, Asian investors ran out of puff.

Meanwhile, analysts said there was a worry on trading floors that the upcoming earnings season could see a lot of firms lower their forecasts for the year ahead.

"There is a clear lack of conviction by investors, with light trading volumes favoring the notion of an exhausted market with big declines set to be recorded this quarter, notwithstanding the outsized gains logged last week," said National Australia Bank's Rodrigo Catril.

Hong Kong was among the big losers, with tech firms reversing the previous day's surge, while there were also losses in Shanghai, Tokyo, Seoul, Singapore, Taipei, Jakarta and Wellington.

Sydney and Manila bucked the trend.

Another pledge by the central People's Bank of China to provide support to the world's number two economy had little impact on sentiment.

Still, some commentators remain relatively upbeat as the second half of the year approaches.

Market strategist Louis Navelier said in a note: "While it's sobering that the first half of the year is the worst since 1970, history also says that when the first half of the year is down at least 15 percent the second half of the year is up every single time with an average return of 24 percent."

And Ben Laidler, a global markets strategist at eToro, added that a lot of the expected economic weakness had been largely factored in by dealers.

"Much is already discounted by markets, which may be in 'bad news is good news' mode, as a slowdown cools inflation and interest rate fears," he said.

"A 'less bad' gradual easing of inflation risks is possible, as is a slowdown -- not recession -- driving a 'U-shaped' rebound. The focus for investors is on cheap and defensive assets while managing rising risks."

Oil prices jumped, building on a rally that has seen Brent and WTI pile on more than eight percent since Wednesday. Both main contracts had fallen heavily earlier in the month on recession worries.

The gains have come on the back of a pick-up in demand from China as it gradually emerges from lockdowns, while supply fears have been raised by political crises in producers Libya and Ecuador.

- Key figures at around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.2 percent at 26,830.69 (break)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 22,046.66

Shanghai - Composite: DOWN 0.4 percent at 3,366.48

West Texas Intermediate: UP 1.1 percent at $110.72 per barrel

Brent North Sea crude: UP 1.1 percent at $116.39 per barrel

Dollar/yen: DOWN at 135.25 yen from 135.48 yen on Monday

Euro/dollar: DOWN at $1.0575 from $1.0583

Pound/dollar: DOWN at $1.2263 from $1.2268

Euro/pound: DOWN at 86.22 pence from 86.24 pence

New York - Dow: DOWN 0.2 percent at 31,438.26 (close)

London - FTSE 100: UP 0.7 percent at 7,258.32 (close)



Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)
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Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)

Iraq produces more than 5 million barrels of oil per day (bpd), Oil Minister Basim Mohammed told state news agency INA on Saturday.

According to Reuters, Iraq is pushing for a higher OPEC production quota as the economic fallout from the Iran war and new investment by oil majors increase pressure on Baghdad to boost output, potentially putting it at odds with the producer group.

The conflict has hit Iraq particularly hard, forcing major export cuts and depriving the state of oil revenue, which accounted for 88% of government income last year.


IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
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IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)

Central bankers around the world would need to consider any slowdown in AI-driven growth as they assess steps in their fight against inflation, International Monetary Fund Managing Director Kristalina Georgieva said on Friday.

Georgieva said concerns about dependence on the AI investment boom and high valuations were impacting markets around the world.

"Things are going up and down, and this is likely to continue," she told an audience at IMF headquarters in Washington, adding that the volatility would complicate the job of central banks at a time when risks to price stability had been growing.

A steep rout in technology stocks on Thursday rippled through markets on fears that ⁠the Democrats' victory ⁠in the US midterm elections would increase regulatory scrutiny of AI and slow the data center build-out, sending investors to the safety of bonds.

The political jitters are hitting an AI trade already on shaky footing due to worry about return on massive spending on AI-related infrastructure, with the meltdown spurring margin calls and spooking retail investors and hedge ⁠funds alike.

Georgieva said the AI investment boom was lifting growth in some countries, helping to offset a negative oil-supply shock triggered by the war in the Middle East, but it was also adding to inflationary pressures and financial stability concerns.

The IMF last month flagged significant growth and financial stability risks from a potential ending of the AI investment boom, among other factors, including a prolonged Middle East war. At the time, it warned that a steep drop in AI investment could lead to a sharp fall in asset prices, ultimately cutting global GDP ⁠by 1.1% ⁠by 2028, including a 1.8% drop in US output.

Georgieva did not repeat the downside forecast on Friday, but acknowledged the recent market volatility.

"Should there be a slowdown in the AI-driven growth impulse, it would need to be factored in as central banks assess the necessary steps in the fight against stubborn inflation," she said.

Democrats are planning to unleash a flood of new legislation targeting artificial intelligence systems and data-center development when they take control of the US Congress in January, Reuters reported on Friday, citing congressional aides and advocates.

That would mark a sharp shift from the Republican-led Congress, where lawmakers largely focused on promoting AI development and declined to pass legislation restricting the technology.


World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
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World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)

World food prices edged lower in October as weaker import demand contributed to monthly declines in cereal, dairy and meat prices, but were still nearly 6% higher than a year earlier, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks monthly changes in international prices for a basket of food commodities, ‌averaged 133.9 points ‌in October, down from a revised ‌135.6 ⁠in September.

The index ⁠was 5.9% higher than a year earlier, but remained 16.4% below its March 2022 peak.

FAO's cereal price index fell 4.5% from September and was 12.6% lower than a year ago, as wheat and maize quotations declined. Wheat prices eased on weak import demand ⁠and improved production prospects, especially in Argentina.

"Expectations of ‌easing constraints on Black ‌Sea export flows added to the downward pressure on prices, ‌although continued disruptions to Black Sea logistics limited the decline," ‌FAO said in a statement.

Maize prices also eased after reaching a three-year high in September, pressured by the US harvest, expectations of ample supplies in South America and renewed ‌prospects of easing tensions in the Black Sea region.

Vegetable oil prices edged up 0.3%, ⁠as ⁠higher soybean and sunflower oil prices more than offset a fall in rapeseed oil prices.

Sugar prices rose 6.6%, their fourth straight monthly increase, to the highest level since December 2024, after rainfall disrupted harvesting in Brazil. They were now 28.8% above a year ago.

The dairy index fell 1.1%, as lower butter and cheese prices linked to ample supplies and subdued demand outweighed gains in milk powder.

The meat index declined 1.2%, while still slightly above its year-earlier level, as ovine and bovine meat prices fell.