Concerns about a weakening economy and persistent inflation continued to weigh on the market on Tuesday morning, as Asia-Pacific stocks fluctuated.
The Nikkei 225 index in Japan gained 0.45% around 10:52 PM ET (2:52 AM GMT).
The KOSPI decreased by 0.37 percent.
The Australian ASX 200 index increased by 0.96 percent.
The Hang Seng index declined 0.89 percent.
Shanghai Composite fell 0.20 percent, and Shenzhen Component rose 0.60 percent. Over the weekend, the number of COVID-19 cases continued to grow in China, adding to concerns about the country’s economic recovery path.
Crude oil was close to $108 a barrel. The S&P 500 rose 1.06 percent, while the Nasdaq 100 rose 0.71 percent. On Independence Day, U.S. markets will shut.
David J. Kostin, an analyst at Goldman Sachs (NYSE:GS), observed that throughout the first half of the year, every S&P 500 sector except energy had negative returns.
“The present bear market has been totally driven by valuations rather than lowered profit projections,” he said.
“However, we anticipate that consensus profit margin predictions would decline, leading to lower EPS revisions regardless of whether the economy enters a recession.”
In the United States and others, economic fragility is becoming more evident.
The highly regarded GDPNow prediction from the Federal Reserve Bank of the Atlantic predicts a negative 2.1 percent growth rate for the second quarter, indicating that the nation was already in a technical recession.
Last week, Fed Chair Jerome Powell reaffirmed the Fed’s resolve to bring down soaring prices despite the possibility of a recession triggered by tighter monetary policy. Now, the market expects the Fed to raise rates by 75 basis points this month.
“However, the market has also begun pricing in a more aggressive rate-cutting profile for the Fed in 2023 and 2024, which is consistent with the likelihood of a worsening recession,” NAB analysts added.
“About 60 basis points of Fed cutbacks are now priced into 2023,”
