Asian Equities, Oil Prices Dragged by Recession Fears

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 Equities, Oil Prices Dragged by Recession Fears

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 investors extended a sell-off across global markets Wednesday while oil held losses on growing fears Federal Reserve monetary tightening will tip the US economy into recession.

The drop followed another day deep in the red for New York's three main indexes after the heads of Wall Street's leading banks warned of tough times ahead in 2023, AFP said.

JPMorgan Chase chief Jamie Dimon tipped a "mild to hard recession" and Goldman Sachs' David Solomon said jobs and pay would be hit, while Morgan Stanley and Bank of America were also uneasy about the outlook.

The comments added to the downbeat mood that has coursed through trading floors at the start of the week, after forecast-beating reports on jobs and the giant US services sector fanned worries the Fed will have to push interest rates higher than hoped.

Markets had been rising healthily ahead of Friday's employment figures after a weaker-than-expected inflation reading for October suggested the almost year-long tightening campaign was finally affecting prices.

"Any hopes that the Fed would turn more dovish in the months ahead have been dashed significantly as the vast US services industry is where sticky inflation hangs out," said SPI Asset Management's Stephen Innes.

He added that the latest readings suggest rates will go above five percent before the Fed stops hiking, while several observers have suggested they will not be reduced until 2024.

In early trade, Tokyo, Shanghai, Sydney, Seoul, Singapore, Manila and Jakarta were all down. However, Hong Kong, which has been the standout performer in recent weeks, clipped slightly higher.

But Lauren Goodwin, at New York Life Investments, saw further pain ahead for markets.

"We have not yet seen the bottom on equity prices," she said, according to Bloomberg News. "While this phase of equity market volatility is likely to end in the next few months, earnings have not yet adapted to a recessionary environment."

The sombre outlook overshadowed hopes that China's moves to wind back some of its harsh Covid rules will kickstart the world's number two economy, which has been battered this year by months of lockdowns and other containment measures.

It also kept oil prices at lows not seen for around a year as demand expectations tumble.

Brent on Tuesday sank below $80 for the first time since January, while WTI was at its lowest since December, having plunged from the 14-year highs of around $140 touched in March after Russia invaded Ukraine. Both contracts were barely moved in Asian trade.

"The crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies," said OANDA's Edward Moya.

"Supplies seem plentiful over the near term and that has everyone hesitating on what was one of the easiest trades of the year."

- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.5 percent at 27,756.94 (break)

Hong Kong - Hang Seng Index: UP 0.5 percent at 19,529.70

Shanghai - Composite: DOWN 0.3 percent at 3,201.71

Euro/dollar: DOWN at $1.0465 from $1.0470 on Tuesday

Dollar/yen: UP at 137.11 yen from 137.04 yen

Pound/dollar: UP at $1.2135 from $1.2133

Euro/pound: DOWN at 86.24 pence from 86.26 pence

West Texas Intermediate: DOWN 0.1 percent at $74.16 per barrel

Brent North Sea crude: UP 0.2 percent at $79.48 per barrel

New York - Dow: DOWN 1.0 percent at 33,596.34 (close)

London - FTSE 100: DOWN 0.6 percent at 7,521.39 (close)



Maritime Disruptions Cast Shadow on Global Energy Security

A container ship passing through the Suez Canal (Suez Canal Official Website)
A container ship passing through the Suez Canal (Suez Canal Official Website)
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Maritime Disruptions Cast Shadow on Global Energy Security

A container ship passing through the Suez Canal (Suez Canal Official Website)
A container ship passing through the Suez Canal (Suez Canal Official Website)

As the world focuses on the Red Sea due to rising attacks on passing ships, experts warn of growing threats to the region's shipping lanes, which could impact global energy security.

Some link the disruptions to regional geopolitical changes, while others believe they are part of a planned strategy due to the area’s natural resources.

Recently, a commercial ship off Yemen’s coast issued a distress call after a missile attack.

This incident coincided with the first international conference on energy security through maritime safety kicking off in Cairo, organized by the Saif Bin Helal Center for Studies and Research in Energy Sciences.

The conference stressed that secure waterways are essential for energy exports and development.

“The region is unstable. Geostrategic, economic, and security challenges are mounting,” warned former Arab League Secretary-General and Egyptian Foreign Minister Amr Moussa at the opening of the conference.

“Disruptions in maritime routes threaten the stability, sovereignty, and wealth of nations. These are broad challenges, not just Red Sea issues—they’re reshaping global interests,” he added.

With this warning, he highlighted the ongoing turmoil in the Suez Canal, Bab el-Mandeb, and the Black Sea.

Moussa also warned about the risks of alternative routes being studied by various countries.

“These routes will serve specific national interests, not the security of international trade,” he cautioned.

On his part, Former Egyptian Petroleum Minister Osama Kamal stressed the vital role of the region’s waterways, especially with Gulf nations being major energy players worldwide.

He pointed out that without energy, there can be no development.

As the conference continued, British security firm Ambrey reported that a merchant vessel off the Yemeni coast took on water and tilted to one side after being targeted with three missiles.

The vessel issued a distress call stating it had sustained damage to the cargo hold and was taking on water approximately 54 nautical miles southwest of Yemen’s Hodeidah, Ambrey added.