Asian stocks mixed as markets eye U.S. interest rates and prices

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People wearing protective masks walk past an electronic board displaying Japan’s Nikkei 225 index at a securities firm on Monday, May 16, 2022 in Tokyo. Asian stocks were trading mixed on Monday as investors watched soaring energy costs and how quickly interest rates could rise in the United States (AP Photo/Eugene Hoshiko)

PA

Asian stocks traded mixed on Monday as investors watched soaring energy costs and prospects for U.S. interest rate hikes

Benchmarks rose slightly in Japan and Australia, while they fell in South Korea and China.

Some analysts worry 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 said it would continue raising interest rates to temper rising inflation. The benchmark short-term interest rate was at an all-time high near zero for much of the coronavirus pandemic.

“Many others had spotted recession risk in 2024, but we were aggressive early on in our forecast of a possible US recession this year,” said Clifford Bennett, chief economist at ACY Securities.

Japan’s benchmark Nikkei 225 gained 0.2% in morning trade to 26,492.29. Shares of SoftBank Group rose despite reporting heavy losses on its investments last week. The Uniqlo chain of stores also rose after falling in previous weeks due to concerns over the lockdown in China.

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

Even though concerns about interest rate hikes have eased somewhat, investors are still watching closely what Fed Chairman Jerome Powell might say next, said Stephen Innes, managing partner at SPI Asset Management. .

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

Wall Street ended last week with a broad rally, but the market still recorded 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 gained 1.5% to 32,196.66, while the Nasdaq rose 3.8% to 11,805. Smaller company stocks also staged a strong rally. The Russell 2000 gained 3.1% to 1,792.67.

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

The next set of corporate results could provide some insight into how inflation affects businesses and consumers. Several major US retailers are reporting results later this week, including Walmart, Target and Home Depot.

Markets have slumped since late March as traders fear the Fed will fail in its delicate mission to slow the economy to tame the highest inflation in four decades without triggering a recession.

In energy trading, benchmark U.S. crude fell $1.61 to $108.89 a barrel in electronic trading on the New York Mercantile Exchange. It jumped from $4.36 to $110.49 on Friday. Brent, the international standard, fell $1.68 to $109.87 a barrel.

In currency trading, the US dollar fell slightly to 128.89 Japanese yen from 129.28 yen. The euro traded at $1.0397, down from $1.0402.

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