Asian equities mixed as markets eye US interest rates and prices


Asian stocks traded mixed on Monday as investors eyed rising energy costs and prospects for US interest rate hikes

Benchmarks rose in Japan and Australia while falling in South Korea and China.

Some analysts fear that if the US Federal Reserve raises interest rates too quickly or too much, it could trigger a recession. A slowdown in the US would almost certainly hurt the Asian region, which exports and manufactures for the US economy.

The Fed has announced that it will raise interest rates again to curb rising inflation. The short-term benchmark interest rate has been at record lows near zero for much of the coronavirus pandemic.

“Many others had recognized the risk of a recession in 2024, but we have been aggressive from the start in our forecast for a possible US recession this year,” said Clifford Bennett, chief economist at ACY Securities.

Japan’s benchmark Nikkei 225 rose 0.2% to 26,492.29 in morning trade. SoftBank Group shares rose despite reporting sharp losses on its investments last week. Retail chain Uniqlo also rose after falling over the past few weeks on worries about China’s lockdown.

In other regional trading, Australia’s S&P/ASX 200 was up 0.2% to 7,092.30. South Korea’s Kospi fell 0.1% to 2,601.41. Hong Kong’s Hang Seng slipped 0.2% to 19,851.63. while the Shanghai Composite was down 0.3% to 3,074.79.

While concerns about rate hikes have been somewhat allayed, investors are still watching closely what Fed Chair Jerome Powell might say next, said Stephen Innes, managing partner at SPI Asset Management.

“That doesn’t mean the bear market is over, especially when the recession is on everyone’s lips,” Innes said.

Wall Street ended last week with a broad rally, but the market still posted its sixth straight weekly decline, the longest such streak since 2011.

The S&P 500 rose 2.4% to 4,023.89. The index is now down 15.6% for the year. The Dow was up 1.5% to 32,196.66, while the Nasdaq was up 3.8% to 11,805. Smaller company stocks also staged a solid rally. The Russell 2000 was up 3.1% to 1,792.67.

Though some tech stocks rose, Twitter fell 9.7% on Friday after Tesla CEO Elon Musk said he was shelving his deal to acquire the social media company. Tesla rose 5.7%.

The upcoming round of corporate earnings could shed some light on how inflation is affecting businesses and consumers. Several major US retailers are reporting results later this week, including Walmart, Target and Home Depot.

Markets have tumbled since late March as traders fear the Fed may fail in its delicate mission of slowing the economy to curb the highest inflation in four decades without triggering a recession.

In energy trading, the US crude oil index lost $1.61 to $108.89 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, it rose $4.36 to $110.49. Brent crude, the international standard, fell $1.68 to $109.87 a barrel.

In forex trading, the US dollar fell from 129.28 yen to 128.89 Japanese yen. The euro cost $1.0397 compared to $1.0402. Asian equities mixed as markets eye US interest rates and prices

Bobby Allyn

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