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Asian Shares Slip, Bond Yields Rise As Investors Await ECB




(C) Reuters. A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying Shanghai Composite index, Nikkei index and Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, March 7, 2022. REUTER

By Andrew Galbraith

SHANGHAI (Reuters) – Asian stocks fell, U.S. bond yields rose and a soaring dollar pushed to a two-decade high against the yen on Thursday as investors worried about the outlook for more rate rises ahead of a key meeting of the European Central Bank later in the day.

But before the meeting, at which the ECB is set to bring to an end its Asset Purchase Programme and signal rate hikes to combat rising inflation, moves in the Asian session were relatively muted as many investors kept to the sidelines.

“It’s classic pre-central-bank-meeting price action. To speculate now on anything other than an hourly timeframe, or an intraday timeframe, doesn’t make a whole lot of sense at the moment,” said Matt Simpson, senior market analyst at City Index in Sydney.

“It’s the most exciting meeting since (Christine Lagarde) has been at the helm, since Draghi was here – ‘whatever it takes’.”

Adding to concern over European inflation, data showed the euro zone economy grew much faster in the first quarter than the previous three months, despite the war in Ukraine.

As investors guess at the size and pace of ECB tightening, they are also awaiting U.S. consumer price data on Friday that the White House has said it expects to be “elevated”. Economists expect annual inflation to be 8.3%, according to a Reuters poll.

While Asian share markets have risen around 8% from nearly two-year lows touched last month, investors remain worried that central bank policy tightening to control inflation could spark an economic slowdown.

In morning trade, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.39%, tracking losses in U.S. stocks in the previous session.

Australian shares were down 1.19% and Seoul’s KOSPI slipped 0.64%, though Hong Kong’s Hang Seng eked out a gain of less than 0.2% and Chinese A-shares were flat.

In Japan, the Nikkei stock index was also unchanged.

Overnight, the Dow Jones Industrial Average fell 0.81%, the S&P 500 lost 1.08% and the Nasdaq Composite dropped 0.73%.

“Over the last two weeks, trading has been in a very narrow range and also based on very low volumes,” analysts at ING said in a note.

“Previous instances of this range trading on low volumes have usually preceded a sharp down-shift,” they cautioned, adding that the ECB meeting and Friday’s U.S. price data were likely “catalysts for a more bearish outlook.”

The wait for U.S. price data also weighed on U.S. Treasuries, which saw yields rise following a weak auction of 10-year notes on Wednesday.

The U.S. 10-year yield edged up on Thursday to 3.0548% from a U.S. close of 3.029% on Wednesday and the two-year yield, climbed to 2.8027% compared with a U.S. close of 2.774%.

Rising yields supported the dollar, particularly against the yen, which dropped to a 20-year low of 134.56. The Japanese currency has been weighed down by a widening policy divergence, with the Bank of Japan remaining one of the few global central banks to maintain a dovish stance. [FRX/]

The global dollar index was slightly higher at 102.6, and the euro was flat ahead of the ECB meeting at $1.0712.

Crude oil prices extended gains, rising to their highest levels in three months on hopes for strong U.S. demand and a recovery in China as COVID-19 curbs are eased.

Global benchmark Brent crude was last at $123.83 per barrel, up 0.2% on the day. U.S. crude added 0.17% to $122.32.

Gold, sensitive to rate hikes but seen as an inflation edge, was weaker. Spot gold lost 0.1% to %1,851.35 per ounce. [GOL/]

Asian shares slip, bond yields rise as investors await ECB

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Oil Extends Losses As Recession Fears Mount





(C) Reuters. FILE PHOTO: Sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant/

By Yuka Obayashi

TOKYO (Reuters) – Oil prices fell 2% in early trade on Thursday, extending losses from the previous day, as investors worried that aggressive U.S. interest rate hikes could trigger a recession and dent fuel demand.

U.S. West Texas Intermediate (WTI) crude futures fell $2.39, or 2.3%, to $103.80 a barrel by 0031 GMT. Brent crude futures dropped $2.24, or 2.0%, to $109.50 a barrel.

Both benchmarks tumbled around 3% on Wednesday to hit their lowest levels since mid-May.

Investors are continuing to assess how worried they need to be about central banks potentially pushing the world economy into recession as they attempt to curb inflation with interest rate increases.

“Oil markets remained under pressure as investors were concerned that U.S. rate hikes would stall an economic recovery and dampen fuel demand,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

“The U.S. and European hedge funds have been selling off their positions ahead of the end of the second quarter, which is also cooling investor sentiment,” he said, predicting the WTI could fall below $100 a barrel before the July 4 holiday in the United States.

The Federal Reserve is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, U.S. central bank chief Jerome Powell said on Wednesday.

U.S. President Joe Biden, meanwhile, called on Congress to pass a three-month suspension of the federal gasoline tax to help combat record pump prices and provide temporary relief for American families this summer.

“The news temporarily boosted the oil product prices, but it was later viewed that even if the gasoline tax was suspended, retail prices would remain high, making it difficult to stimulate demand,” Fujitomi’s Saito said.

The U.S. Energy Information Administration said its weekly oil data, which was scheduled for release on Thursday, will be delayed due to systems issues until at least next week.

Oil extends losses as recession fears mount

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BMW Starts Production at New $2.2 Billion China Plant to Ramp up EV Output





(C) Reuters. FILE PHOTO: A BMW iX electric vehicle (EV) is seen displayed at the BMW booth during a media day for the Auto Shanghai show in Shanghai, China April 19, 2021. REUTERS/Aly Song

SHANGHAI (Reuters) – Germany’s BMW said on Thursday that production has formally begun at a new plant in China with an investment of 15 billion yuan ($2.24 billion) as the carmaker accelerates electric vehicle (EV) production.

The Lydia plant, BMW’s third car assembly facility in China, located in the northeastern city of Shenyang, Liaoning province, will increase BMW’s annual output in the world’s biggest auto market to 830,000 vehicles from 700,0000 in 2021, the company said.

The plant is designed to be capable of producing battery-powered electric cars only according to market demand on its flexible manufacturing lines, BMW said.

The first model that will roll off the Lydia plant’s production lines is the i3, a pure electric mid-sized sports sedan, BMW said, increasing the range of its EV models for Chinese customers to 13 next year.

Tesla (NASDAQ:TSLA) and Chinese automakers such as BYD dominate the booming EV market in China, with sales more than doubling from a year ago. Meanwhile kings of the internal combustion engine age such as General Motors (NYSE:GM) and Volkswagen (ETR:VOWG_p) are falling behind.

Nearly a quarter of the cars sold in China in the first five months of this year were powered by batteries, according to data from China Association of Automotive Manufactures.

Meanwhile BMW sold 208,507 vehicles in China, its biggest market, in the first quarter, marking a 9.2% drop from a year ago, according to a company filing.

($1 = 6.6983 Chinese yuan renminbi)

BMW starts production at new $2.2 billion China plant to ramp up EV output

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Asian Stocks Down After Fed Chair Acknowledges the Risk of a Recession




(C) Reuters

By Zhang Mengying – Asia Pacific stocks were mostly down on Thursday morning as investors assessed the monetary policy outlook after U.S. Federal Reserve Chair Jerome Powell acknowledged the risk of a recession.

Japan’s Nikkei 225 stabalized by 8:45 PM ET (1:45 AM GMT).

South Korea’s KOSPI edged down 0.10%.

In Australia, the ASX 200 rose 0.30%.

Hong Kong’s Hang Seng was up 0.62%.

China’s Shanghai Composite was up 0.39% while the Shenzhen Component was down 0.49%.

U.S. 10-year Treasuries yields declined two basis points to 3.13%.

Investors’ concerns grew as Fed Chair Jerome Powell acknowledged the risk of a recession. Powell said that an aggressive interest rate hike could lead to an economic contraction and called a soft landing “very challenging” in his testimony to the Senate Wednesday.

“We are still in an era where uncertainty is elevated and is expected to remain so for quite a while,” Advisors Capital Management portfolio manager JoAnne Feeney told Bloomberg.

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

Powell “has acknowledged that rates will continue to increase, but the FOMC committee is cognizant of watching incoming data, suggesting the Fed will not be exclusively on autopilot with tightening,” Integrity Asset Management portfolio manager Joe Gilbert told Bloomberg.

Powell will continue his testimony to the House later in the day.

On the data front, U.S. initial jobless claims is due on Thursday while U.S. University of Michigan consumer sentiment will be released on Friday.

Asian Stocks Down after Fed Chair Acknowledges the Risk of a Recession

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