A currency trader watches monitors at a foreign exchange dealing room in Seoul, South Korea, Thursday, June 23, 2022. Asian stock markets were mixed Thursday after Wall Street edged lower amid fears that higher interest rates will chill global economic growth. (AP Photo/Lee Jin-man)
BEIJING (AP) — European stocks opened lower Thursday while Asian markets gained after the Federal Reserve chairman said a recession is possible as the U.S. central bank raises interest rates to cool surging inflation.
London and Frankfurt declined. Shanghai, Tokyo and Hong Kong closed higher. Oil prices fell more than $2 per barrel to near $100.
Wall Street futures were lower, pointing to a possible second day of declines after Jerome Powell said Wednesday that a recession was “certainly a possibility” as the U.S. central bank tries to rein in inflation that is running at a four-decade high.
“The market now accepts recession is a risk, having been in total denial,” said Michael Every of Rabobank in a report.
In early trading, the FTSE 100 in London fell 0.6% to 7,049.04 and the DAX in Frankfurt sank 1% to 13,009.69. The CAC 40 in Paris lost 0.8% to 5,869.49.
On Wall Street, the future for the benchmark S&P 500 index was off less than 0.1% and that for the Dow Jones Industrial Average was down 0.2%.
On Wednesday, the S&P 500 lost 0.1% after swinging between a gain of 1% and a loss of 1.3% during the day.
The Dow and the Nasdaq composite both slipped 0.2% to 11,053.08.
In Asia, the Shanghai Composite Index rose 1.6% to 3,320.15 and the Nikkei 225 in Tokyo added less than 0.1% to 26,171.25. The Hang Seng in Hong Kong gained 1.3% to 21,273.87.
The Kospi in Seoul retreated 1.2% to 2,314.32 while Sydney's S&P-ASX 200 rose 0.3% to 6,528.40.
India's Sensex gained 0.7% to 52,194.52. New Zealand, Singapore and Jakarta advanced while Bangkok fell.
Last week, the Fed raised its benchmark rate by three quarters of a percentage point, three times its usual margin and the biggest increase in nearly three decades.
Investors worry U.S. and European rate hikes might derail global growth, but Powell said it is “absolutely essential” that the Fed restore stable prices.
“We now anticipate the most aggressive and synchronized tightening cycle" by global central banks since the 1980s, said Jennifer McKeown of Capital Economics in a report. “The key question now is not whether central banks will slam on the brakes, but what might stop them?”
Also Thursday, the Philippine central bank raised its key rate by one-quarter percentage point while Indonesia's central bank left rates unchanged.
Fed policymakers say they anticipate more rate hikes this year and next and at a quicker tempo than previously forecast. They say the U.S. central bank's key rate should reach 3.8% by the end of 2023, its highest level in 15 years.
Surging prices have soured consumer sentiment in the United States, the world's biggest market. Retail spending is sagging.
Inflation fears have been aggravated by a spike in prices of oil, wheat and other commodities due to Russia's attack on Ukraine.
Oil prices fell for a second day, suggesting traders anticipate weaker demand as economic activity cools.
Benchmark U.S. crude tumbled $2.01 to $104.18 per barrel in electronic trading on the New York Mercantile Exchange. The contract declined $3.33 on Wednesday to $106.19. Brent crude, the price basis for international trading, retreated $2.03 to $106.62 per barrel in London. It sank $3.12 the previous session to $108.65.
The dollar fell to 135.46 yen from Wednesday's 136.28 yen. The euro sank to $1.0501 from $1.0566.7 Risk-Off Stocks to Buy as Inflation Remains at Record Levels
Inflation has gone from a transitory problem that would take care of itself to an existential threat that is moving the Federal Reserve to take swift, aggressive action. In January 2022, the Consumer Price Index (CPI) showed inflation in the United States was at its highest level since 1982.
And the market is reacting predictably with what appears to be a shift from risk-on to risk-off assets. This is having a negative effect on many stocks, particularly in the tech sector, that are no longer justifying their extended valuations.
But investors are also seeing a drop in cryptocurrency prices and other speculative assets. This may be a short-term phenomenon, but if you’re an investor looking at how to make money in 2022; it’s time to get a little defensive. But playing defense doesn’t mean accepting mediocre growth. It simply means moving into stocks and sectors that are likely to benefit from high inflation and rising interest rates.
That’s the focus of this special presentation. We invite you to consider these seven risk-off stocks that look like strong candidates to increase in value even as inflation remains high.View the "7 Risk-Off Stocks to Buy as Inflation Remains at Record Levels"