Asian markets, oil lower on recession fears, debt ceiling clouding outlook

Asian stocks were mostly lower on Monday, dogged by lingering concerns about a possible recession and the risk of default on US government debt. US futures and oil prices also fell.

Shares in Thailand fell after the country’s main opposition parties easily defeated other contenders an election result that fulfilled many voters’ hopes for a chance for change after nine years under a former general who led the coup. The SET fell 0.8% in early trading.

This week brings important updates on the Chinese and Japanese economies. China’s faltering recovery from disruptions caused by restrictions on travel and other activities during the COVID pandemic has led to concerns that it will not deliver the kind of growth needed to offset slowdowns in other major economies.

The sharp moderation in China’s economic surprise index since the beginning of the month suggests that economic data is becoming less optimistic than before, casting some doubt on markets reopening, Yeap Jun Rong, a market analyst at IG, said in a comment.

The Nikkei 225 in Tokyo bucked the regional trend, gaining 0.8% to 29,611.52.

Hong Kong’s Hang Seng Index rose 0.1% to 19,654.68 and the Shanghai Composite Index fell 0.9% to 3,241.58. The Australian S&P/ASX 200 lost 0.2% to 7,241.70, while South Korea’s Kospi lost 0.2% to 2,470.15.

Last weekend, the finance ministers of the Group of seven advanced economies concluded a meeting in Japan with a call for vigilance given the many uncertainties surrounding the global economy.

However, they also said that financial systems have shown resilience despite recent developments bankruptcies of several banks in the US and Europe. No mention was made of the urgency of resolving a deadlock between US President Joe Biden and Republican lawmakers over raising the debt ceiling to enable the treasury to pay its bills.

Friday brought a quiet close on Wall Street, despite major concerns swirling beneath the surface.

The S&P 500 fell 0.2% to 4,124.08, ending its sixth straight week up less than 1%. The Dow Jones Industrial Average fell less than 0.1% to 33,300.62, while the Nasdaq composite lost 0.4% to 12,284.74.

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Despite seemingly calm movements for the overall market, there have been major swings beneath the surface amid concerns about a possible recession, high inflation and the US government is approaching what could be a catastrophic default on his fault.

A preliminary study from the University of Michigan released Friday shows that consumer sentiment is falling. That is a concern, as strong consumer spending has been one of the key factors preventing a recession as the economy slows.

President Joe Biden and congressional leaders postponed a meeting set for Friday on the debt crisis to next week. The delay was heralded as a sign of positive exchanges and staff-level talks continued throughout the weekend.

PacWest Bancorps shares fell 3%. It’s coming under heavy scrutiny as Wall Street hunts for the next possible US bank to fail after three high-profile collapses since March. The stock lost 21% last week.

Rising interest rates have led some customers to draw bank deposits in search of higher yields, while also lowering prices for the investments banks hold.

The Federal Reserve raised interest rates to curb inflation. Recent reports suggest that price increases are moderating, although inflation remains too high for the comfort of households and regulators.

The hope on Wall Street is that declining inflation can convince the Fed not to raise rates again at its next meeting in June. That would provide some breathing room for both the economy, which has slowed under the weight of higher interest rates, and the financial markets, where prices have long since begun to fall.

On other trading Monday, US benchmark crude was up 47 cents to $69.57 a barrel. It lost 83 cents to $70.04 a barrel on Friday.

Brent crude, the price base for international trade, lost 53 cents to $73.64 a barrel.

The US dollar rose from 135.69 yen on Friday to 136.21 Japanese yen. The euro was trading at $1.0858, up from $1.0854.