Asian shares mixed after Wall St barely misses bear market
Shares are mixed in Asia in cautious trading after Wall Street rumbled to the edge of a bear market on Friday.
Tokyo, Sydney and Hong Kong were higher Monday, while Shanghai and Hong Kong declined.
Investors were awaiting minutes from the latest policy setting meeting of the Federal Reserve and updates on consumer prices, due later this week.
On Friday the S&P 500 dipped more than 20% below its peak set early this year before buying late in the day gave it a tiny gain. It finished 18.7% below its record. That capped a seventh straight losing week, the longest since 2001, when the dot-com bubble was deflating.
Inflation and rising interest rates, the war in Ukraine, and China’s slowing economy are all punishing stocks and raising fears about a possible U.S. recession.
The Nikkei 225 in Tokyo gained 0.5% to 26,868.02. The launch of an American initiative on economic cooperation was the result of President Joe Biden’s trip to Japan and South Korea. The Indo-Pacific Economic Framework was launched by the White House. It is meant to help the United States, Asian economies, and other countries, work closer on issues such as supply chains, digital trade and worker protections.
However, the details still need to be negotiated among member countries, making it unclear how the framework might help U.S. workers and businesses while also serving the interests of partner countries.
South Korea’s Kospi was unchanged, at 2,639.58.
Australia’s S&P/ASX 200 edged 0.1% higher to 7,154.70. After almost a decade in power, Australia’s center-left opposition party overthrew the conservative government on Saturday.
Anthony Albanese was sworn in as prime minister after his Labor party clinched its first electoral win since 2007. Labor has promised more financial assistance and a robust social safety net as Australia grapples with the highest inflation since 2001 and soaring housing prices.
Analysts said that the new administration’s policy stance was not significantly different than the incumbent government, and that no major changes were expected.
“Although it is possible that Labor will represent a slightly more fiscally supportive government than their predecessors, we don’t see many implications for financial markets from this election result,” ING Economics economists said in a commentary.
Hong Kong’s Hang Seng index lost 1.4% to 20,424. 23 while the Shanghai Composite index declined 0.4% to 3,133.38.
On Friday, the S&P 500 finished the day up 0. 57 points at 3,901.36. The Dow Jones Industrial Average edged up less than 0.1%, to 31,261.90. The Nasdaq composite trimmed a big loss to finish 0.3% lower, at 11,354.62.
Many big tech stocks, seen as some of the most vulnerable to rising interest rates, have already fallen much more than 20% this year. That includes a 37.2% tumble for Tesla and a 69.1% nosedive for Netflix.
It’s a sharp turnaround from the powerful run Wall Street enjoyed after emerging from its last bear market in early 2020, at the start of the pandemic.
With inflation at its highest point in 40 years, the Fed is now raising interest rates and making other moves that will lower inflation. It is possible that it could go too far or too fast.
Goldman Sachs economists recently put the probabilty of a U.S. recession in the next two years at 35%.
Inflation has been painfully high for months. The market’s fears grew after Russia’s invasion in Ukraine. This caused prices to spiral further at gas pumps and grocery stores. Russia is a major producer of energy and grains in the region. Adding pressure to stocks is a sign that corporate profits are slowing down and may finally be suffering from inflation.
In other trading, U.S. benchmark crude oil added 47 cents to $110. 75 per barrel in electronic trading on the New York Mercantile Exchange. It gained 39 cents to $110. 28 on Friday.
Brent crude, used as the basis for pricing for international trading, advanced 67 cents to $113. 22 per barrel.
The U.S. dollar slipped to 127. 29 Japanese yen from 127. 87 yen late Friday. The euro rose to $1. 0593 from $1.0564.
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