Stocks on the defensive as inflation worries linger

Stocks Pressured Anew by the Specter of Recession: Markets Wrapped

Bloomberg stock prices are facing losses in Asia Wednesday due to renewed worries about a gloomy outlook, extending a period of market volatility as monetary policy tightens to fight inflation.

Futures fell for Japan, Australia and Hong Kong. The US contracts were steady after the S&P 500 sank and the tech-heavy Nasdaq 100 lost more than 3%. Market flows may be affected by a month and quarter-end portfolio rebalancing by institutional investors.

Concerns overshadowed China's move Tuesday to reduce quarantine times for inbound travelers. The step had lifted markets on hopes of a shift away from a strategy of stamping out Covid that comes with great economic cost via repeated lockdowns.

Oil held gains, trading in the vicinity of $112 a barrel. Among poor sentiment, Bitcoin wallowed around $20,000 in cryptocurrencies.

There are investors skeptical that the Federal Reserve can avoid an economic downturn because of interest-rate hikes to clamp down on price pressures.

Emily Weis, a macro strategist at State Street Corp., said on Bloomberg TV that the Fed still believes that it can thread that fine line between tighter financial conditions and not hurting the economy too much. We're still not sure if they're going to be able to pull that off. That is what we have seen in the markets over the last month or so. She added that the recent step to reduce quarantine for inbound travelers in China led to a relief rally, but the Covid-zero policy is still well established, which will likely lead to regular reopening disruptions.

The US officials tried to play down the risk of a recession. New York Fed President John Williams and San Francisco s Mary Daly acknowledged that they had to cool inflation, but insisted that a soft landing was still possible.

In Europe, central bank President Christine Lagarde affirmed plans for an initial quarter-point rate increase in July, but said policy makers are ready to step up action to tackle record inflation if warranted.

This week s MLIV Pulse survey looked at the outlook for earnings and stock prices.

Markets are some of the main moves in these markets:

The offshore currency was 6.7038 per dollar.

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