Markets Fluctuate, Oil Falls again as Recession Warnings Build

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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Markets Fluctuate, Oil Falls again as Recession Warnings Build

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 struggled Thursday to recover from the previous day's battering, while oil extended losses, after Federal Reserve boss Jerome Powell admitted the economy could tip into recession as the bank hikes interest rates to fight runaway inflation.

Soaring prices and central banks' battle to rein them in have sent a chill through global trading floors this year, while investors are also having to deal with the uncertainty wrought by the Ukraine war and patchy pandemic recovery, AFP said.

Commentators have warned for some time that the world economy could be heading for another contraction owing to the sharp increase in borrowing costs and rampant inflation, which is at decades highs in several countries.

And on Wednesday the head of the most powerful central bank in the world told lawmakers that it was "certainly a possibility".

While saying the economy was strong enough for rates to rise, he added that "frankly, the events of the last few months around the world have made it more difficult for us to achieve what we want, which is two percent inflation and still a strong labor market."

He also warned: "Inflation has obviously surprised to the upside over the past year, and further surprises could be in store".

The Fed this month hiked rates by 75 basis points and is expected to do the same in July, with some observers predicting two more such moves after that.

After a day of swings, Wall Street ended in negative territory, though off big early lows.

Asia fluctuated after a big sell-off Wednesday, with optimism at a premium among investors and analysts saying it is unlikely to improve anytime soon.

Hong Kong, Sydney, Singapore and Wellington were slightly higher but Tokyo, Shanghai, Seoul, Taipei, Manila and Jakarta fell.

"Having listened to Powell's lengthy Senate testimony... it is clear that inflation is the domestic issue at the top of the political agenda," said SPI Asset Management's Stephen Innes.

"Powell consistently bobbed and weaved his way through commenting on anything of fiscal nature but was focused on deploying the tools within the Fed's power to address their dual mandate" of reining in inflation and keeping unemployment in check.

"So we should still position for more rate hike fallout to occur."

Powell's comments came as other top economists added to the recession talk, with former New York Fed President Bill Dudley saying it was "inevitable within the next 12 to 18 months".

And Deutsche Bank CEO Christian Sewing said there was a 50 percent chance of a contraction next year.

Elon Musk, JP Morgan boss Jamie Dimon and Nouriel Roubini are among several others to have made similar forecasts.

"We are still in an era where uncertainty is elevated and is expected to remain so for quite a while," said JoAnne Feeney, of Advisors Capital Management, on Bloomberg Television.

"It's risky right now in terms of the forward outlook for the global economy. Recession risk has clearly risen."

The prospect of a retreat in the global economy continued to drag oil prices down as traders fret over demand, with both main contracts down more than three percent, having tumbled on Wednesday.

Brent and WTI have dropped around 15 percent over the past week, even with sanctions on Russian crude exports and China's gradual reopening from lockdowns.

Adding to the selling was data Wednesday indicating a jump in US stockpiles.

"A slowdown in global growth is a risk to oil demand, which could help ease some of the tightness in the market," Warren Patterson, at ING Groep, said.

"Already, we have seen demand estimates revised lower."

- Key figures at around 0230 GMT -
Tokyo - Nikkei 225: FLAT at 26,146.71 (break)

Hong Kong - Hang Seng Index: UP 0.2 percent at 21,039.28

Shanghai - Composite: DOWN 0.1 percent at 3,263.02

West Texas Intermediate: DOWN 3.5 percent at $102.51 per barrel

Brent North Sea crude: DOWN 3.2 percent at $108.14 per barrel

Dollar/yen: DOWN at 135.74 yen from 136.22 yen late Wednesday

Pound/dollar: DOWN at $1.2241 from $1.2263

Euro/dollar: DOWN at $1.0561 from $1.0570

Euro/pound: UP at 86.27 pence from 86.17 pence

New York - Dow: DOWN 0.2 percent at 30,483.13 (close)

London - FTSE 100: DOWN 0.9 percent at 7,089.22 (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.