Stocks in Asia were mixed in cautious trading after Wall Street rumbled to the brink of a bear market on Friday.
Tokyo and Sydney were higher on Monday while Hong Kong and Shanghai declined.
Investors awaited the minutes of the Federal Reserve’s latest monetary policy meeting and updates on consumer prices later this week.
On Friday, the S&P 500 fell more than 20% from its high set earlier this year before late-day buying gave it a small gain. It closed 18.7% below its record. That ended the seventh consecutive week of losses, the longest since 2001, when the dot-com bubble collapsed.
Inflation and rising interest rates, the war in Ukraine and China’s slowing economy are punishing stocks and fueling fears of a possible US recession.
The Nikkei 225 in Tokyo gained 0.5% to 26,868.02. President Joe Biden’s visit to Japan and South Korea should lead to the launch of a US initiative on economic cooperation and security.
Dubbed the Indo-Pacific Economic Framework, the White House said it will help the United States and Asian economies work more closely together on issues such as supply chains, digital commerce, clean energy, worker protections and anti-corruption efforts.
However, the details have yet to be negotiated between member countries, leaving unclear how the framework could help US workers and businesses while serving the interests of partner countries.
South Korea’s Kospi was unchanged at 2,639.58.
Australia’s S&P/ASX 200 rose 0.1% to 7,154.70. Australia’s centre-left opposition party ousted the Conservative government on Saturday after nearly a decade in power.
Anthony Albanese was sworn in as Prime Minister after his Labor Party won their first general election since 2007. Labor has pledged more financial support and a robust social safety net as Australia grapples with its highest inflation since 2001 and soaring house prices.
However, analysts said the policy stance of the newly elected government is not significantly different from that of the incumbent government and major changes are not expected.
“While it is possible that Labor is a slightly more fiscally supportive government than its predecessors, we do not see much impact on financial markets in this election result,” economists at ING Economics said in a comment.
Hong Kong’s Hang Seng Index fell 1.4% to 20,424.23, while the Shanghai Composite Index fell 0.4% to 3,133.38.
On Friday, the S&P 500 ended the day up 0.57 points at 3,901.36. The Dow Jones Industrial Average rose less than 0.1% to 31,261.90. The Nasdaq Composite pared a big loss to close 0.3% lower at 11,354.62.
Many big tech stocks, considered the most vulnerable to rising interest rates, have already fallen well over 20% this year. That includes a 37.2% plunge for Tesla and a 69.1% plunge for Netflix.
It’s a sharp reversal after Wall Street’s strong run after emerging from its last bear market in early 2020, at the start of the pandemic.
With inflation at its highest level in four decades, the Fed has switched from maintaining interest rates to super-low rates to support markets and the economy, raising rates and taking other steps to contain inflation. The concern is that it might go too far or too fast.
Goldman Sachs economists recently put the probability of a US recession in the next two years at 35%.
Inflation has been painfully high for months. But market concerns mounted after Russia’s invasion of Ukraine further pushed up prices at grocery stores and gas stations, given the region’s importance as a source of energy and grains.
Putting pressure on stocks is a sign that corporate earnings may be slowing and eventually suffer from inflation.
In other trading, US benchmark crude was up 47 cents to $110.75 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, it rose 39 cents to $110.28.
Brent crude, used as a price base for international trade, rose 67 cents to $113.22 a barrel.
The US dollar slipped from 127.87 yen to 127.29 Japanese yen late Friday. The euro rose to $1.0593 from $1.0564.
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https://www.local10.com/business/2022/05/23/asian-shares-mixed-after-wall-st-barely-misses-bear-market/ Asian stocks mixed after Wall Street narrowly misses bear market