SYDNEY – Asian stocks tumbled on Tuesday as a sharp slide in U.S. stock futures eased on a rally on Wall Street, while the euro was near a one-month high as the ECB tightened its grip on the July rate hike.
After firmly ending Monday, Nasdaq futures lost 1.4%, with traders blaming an earnings warning from Snap that saw Snapchat owner shares fall 28%.
The S&P 500 futures also slipped 0.8%, with some surrendering some of Monday’s 1.8% bounce.
MSCI’s broader index of Asia-Pacific shares fell 0.3% outside Japan in hesitant trading. Japan’s Nikkei fell 0.4% and Chinese blue chips fell 0.3%.
The market took some consolation from US President Joe Biden’s remarks on Monday that he was considering easing tariffs on China and on Beijing’s ongoing commitment to stimulus.
Unfortunately, China’s zero-cue policy, including the attendant lockdown, has already caused considerable economic damage.
“Following the disappointing activity data for April, we have again lowered our forecast for China’s GDP (gross domestic product) and are now looking for a 2Q GDP contraction of 5.4% per annum, previously -1.5%,” JPMorgan analysts warned.
“Our 2Q global growth forecast stands at just 0.6% year-on-year, easily the weakest quarter since the global financial crisis beyond 2020.”
A preliminary survey by European and US manufacturing purchasing managers showed some signs of slowing for Tuesday, which has been a resilient year for the global economy.
Japan’s manufacturing activity rose at its slowest pace in three months in May amid supply disruptions, while Toyota announced plans to cut its output.
Analysts are also cutting growth forecasts for the United States as the Federal Reserve looks set to raise interest rates by an entire percentage point in the next two months.
The hackish message is likely to be driven home this week by a host of Fed speakers and minutes of Wednesday’s final policy meeting.
The European Central Bank is also becoming more sophisticated, with President Christine Lagarde surprising many by opening the door to rate hikes in early July.
It saw the euro at $ 1.0670, bouncing 1.2% overnight in its best session since early March. It is now facing tough chart resistance near $ 1.0756.
The dollar also retreated against a range of sterling and currencies, taking the dollar index down 0.9% overnight. It was up to a fraction at 102.260.
The euro, meanwhile, sharply touched 136.56 Japanese yen, while the dollar remained stable at 127.95 yen.
The dollar pullback helped gold gain some ground back to 1,852 an ounce.
Oil prices were caught amid concerns of a possible global recession and the possibility of higher fuel demand from the US summer driving season and plans to reopen Shanghai after a two-month coronavirus lockdown.
US crude was down 62 cents at 9 109.67 a barrel, while Brent was down 68 cents at 2 112.74.
(Edited by Kenneth Maxwell and Kim Kagil)