Asian Indices Declined on Resumed Fears of Global Recession and Jumped Covid Cases in China

U.S. stock futures are edging higher this European Monday afternoon after the major averages posted their second straight week of losses for the first time since September. All in all, markets retain a lot of bearishness, and the periods of positive movements are still perceived as opportunities to make some profit-taking by so many investors. Most major central banks underlined their commitment to driving inflation down using hawkish monetary policy, which affected market sentiment last week.

On Friday, stocks were hit by resumed fears that the Federal Reserve’s stringent adherence to cool down inflation could tip the economy into a recession. The Dow fell 0.9%, the S&P 500 was down 1.1%, and the Nasdaq Composite dropped 1%. For the week, the S&P 500 fell 2.1%, the Dow lost 1.7%, and the Nasdaq shed 2.7%. Treasury yields rose, with the yield on the 10-year Treasury note now at 3.52%. The yield on the two-year note is 4.18%.

Commoditywise, crude oil prices fell by more than $2 per barrel as global equities sold off. WTI Light sweet crude is now $75.83 per barrel, while Brent is around $80.40 per barrel.

This week, investors will focus on fresh data on the U.S. housing market, inflation, and more corporate earnings. Tonight, the U.S. National Association of Home Builders (NAHB) will release its Housing Market Index for December. Among companies reporting financial results this week are FedEx (FDX), Nike (NKE), General Mills (GIS), Micron (MU) and CarMax (KMX).

At the time of writing, the German DAX climbed up 0.57% as Porsche AG (PAH3.DE) gained 1.90%. The British FTSE 100 is edging higher by 0.71% higher, pulled up by Antofagasta's (ANTO.L) 1.78% increase. The French CAC 40 rose by 0.55% concurrently. Best performer so far is TotalEnergies (TTE.PA) which advanced 2.46%.

Across some more prominent economic data, according to a preliminary report published by Eurostat, the seasonally adjusted construction output in the euro area rose by 1.3% in October on a monthly basis. In the entire European Union (EU27), the monthly increase was also at 1.3%. Annually, the production in the construction sector was up by 2.2% in the Eurozone and by 2.4% in the EU27. European Central Bank (ECB) Governing Council member Peter Kazimir said that “strong action” will be required in 1H 2023 as the upward inflation risks have not subsided. He warned that rates will need to enter restrictive territory and “stay there much longer” than previously estimated.

Stock exchanges in Asia traded in the negative territory earlier this morning as investors braced for interest rate decisions that the People's Bank of China and the Bank of Japan will announce tomorrow. Stock markets in China fell as new cases of Covid-19 have surged. The Shanghai Composite fell 1.9%. The Hang Seng Index fell 0.5%.

The Japan’s Nikkei 225 decreased by 1.05% at the close. The Shanghai Composite fell by 1.92% and the Shenzhen Composite Index declined by 1.51% concurrently. The Hang Seng was down 0.50% at the close. The Kospi lost 0.33% similarly. The S&P/ASX 200 in Australia closed 0.21% lower.