Stocks in Asia opened with a mixed performance on Friday as recession clouds loomed over Europe, and highlighted the relative outperformance of the U.S. economy, plus rising concerns about the health of China’s growth.
As of 9:31 a.m. Thai time, Hong Kong’s Hang Seng index gained 0.25%, whereas The Kospi in South Korea lost 0.14%.
Meanwhile, the Shanghai Composite in China, Japan’s Nikkei 225 and the S&P/ASX 200 in Australia were about flat.
Goldman Sachs and Nomura both lowered their projections for China’s GDP growth on Thursday, citing sluggish demand, uncertainty caused by the zero-Covid policy, and an energy shortage.
Goldman Sachs downgraded its 2022 forecast for China to 3% from 3.3%, while Nomura cut the full-year growth outlook to 2.8% from 3.3%.
The prospect of increasing borrowing costs has been hanging over markets, and recent statements from Fed officials have shown some difference. At least four U.S. Federal Reserve officials have indicated that more work needs to be done on interest rates.
The markets are pricing in a half-point likelihood of a rate hike in September and a one-in-three chance of 75 basis points (bp). Although some Fed members are calling for higher rates, the consensus is that we will see a top of 3.5%.