Asian stocks were mixed on Monday as inflation fears and concerns about low economic growth weighed on markets.
Investors will be looking to the release on Wednesday of notes from the latest Federal Reserve committee meeting for clues on further rate hikes by the US central bank.
Wall Street ended the week essentially flat after the S&P 500 had briefly dipped into a bear market, with the index down about 19 per cent from its January high.
A Chinese interest rate cut did little to cheer Asian markets, with investors concerned about continuing COVID restrictions that are hurting the world’s second-largest economy and snarling international supply chains.
Downcast earning reports from retailers have also heightened market uncertainty at a time of rising interest rates, surging energy prices and Russia’s ongoing war on Ukraine, which is driving commodity prices higher.
“As macro-economic concerns stemming from aggressive monetary tightening, the Russia-Ukraine conflict and China’s stringent COVID lockdowns persist, we anticipate great volatility in the market,” Louise Dudley, portfolio manager global equities at Federated Hermes, said in a note, Bloomberg News reported.
As macro-economic concerns stemming from aggressive monetary tightening, the Russia-Ukraine conflict and China’s stringent COVID lockdowns persist, we anticipate great volatility in the market- Louise Dudley, portfolio manager global equities at Federated Hermes
In Asian trade on Monday, Tokyo climbed 1.3 per cent while Hong Kong slipped 1.5 per cent and Shanghai was down 0.5 per cent. Seoul, Kuala Lumpur and Bangkok were higher while Singapore and Manila were down and Sydney was flat following a weekend election that saw the centre-left Labour party end a decade of conservative rule.
The new government of Prime Minister Anthony Albanese is expected to undertake some policy shifts, particularly on climate change, but economists said they were unlikely to upset growth forecasts.
“In our view there was little proposed by the incoming government during the election campaign that at this stage requires us to revisit our economic forecasts,” Commonwealth Bank of Australia economists said in a note. “Put another way, our economic forecasts and call on the (Australian central bank) are unchanged despite the change of national leadership.”
Oil was higher, with US crude benchmark WTI up 0.5 per cent and Brent gaining 0.7 per cent.
The invasion of Ukraine has shaken up the global market and the outlook for key producer Russia, which has been largely shunned by Western countries.