Tokyo, April 17 (BNA): Asian markets rose on Monday, although concerns about economic growth and inflationary pressures persisted.
Traders are focused on upcoming corporate earnings reports and fear the impact of inflation on moves by the Federal Reserve and other world central banks on interest rates, the Associated Press reports.
Japan’s Nikkei 225 rose nearly 0.1% to 28,514.78. Australia’s S&P/ASX 200 rose 0.3% to 7,381.50, while South Korea’s Kospi rose 0.2% to 2,575.91. Hong Kong’s Hang Seng Index rose 1.7% to 20,793.06 points. The Shanghai Composite Index rose 1.4%, to 3,385.61.
“Markets are experiencing more heat than light as the Fed’s policy outlook oversensitivity to US data continues to cause high volume swings,” said Tan Boon Hing of Mizuho Bank.
The Chinese central bank kept the one-year medium-term lending facility rate unchanged at 2.75%, indicating that the economic growth data to be released on Tuesday will not be too worrying.
Stocks on Wall Street ended lower last week as concerns about interest rates overshadowed an encouraging start to the earnings reporting season.
The S&P 500 fell 8.58 points, or 0.2%, to 4,137.64, after giving up early gains. The Dow Jones Industrial Average lost 143.22, or 0.4%, to 33,886.47, while the Nasdaq Composite fell 42.81, or 0.4%, to 12,123.47.
The S&P 500 is still coming off a winning fourth week in the past five, which was built in part on the hope that the Federal Reserve will soon end its barrage of rate hikes as inflation slows. High interest rates stifle inflation by slowing the economy, increasing recession risks, and lowering investment prices.
A senior Federal Reserve official played down those hopes on Friday after saying that inflation remains too high and more tightening may be needed. Fed board member Christopher Waller also said that even after the hikes in interest rates are over, they will likely need to stay higher for longer than markets anticipate.
After his comments, traders placed their bets that the Federal Reserve will raise interest rates at its next meeting in May, rather than pause for the first time in over a year. Some are also beginning to bet that the Fed may raise interest rates again in June, according to data from CME Group.
High-growth stocks tend to be among the hardest hit by high rates, and big tech stocks were among the heaviest weights in the S&P 500.
Segments of the economy have already begun to slow under the weight of rising interest rates, raising fears of a potential recession. A report on Friday showed that US shoppers cut their spending at retailers last month more than expected. Much of that was due to lower gasoline prices, and the drop in what economists call “core retail sales” wasn’t as bad as expected.
“The challenge for the Fed has been to dampen inflation without putting the economy into a deep standstill in the process,” said Mike Lowengart, head of model portfolio creation at Morgan Stanley Global Investment Office. “The dynamic is still at play in the markets, and we could see volatile price action as a result.”
Possibly making things more difficult for the Federal Reserve is another report on Friday that said US households are bracing for higher inflation. Consumers expect inflation over the next year to be 4.6%, up from forecasts of 3.6% the previous month, according to a preliminary survey from the University of Michigan.
Big gains by several of the country’s largest banks helped offset some of the concerns about rates. They reported earnings for the first three months of the year that beat previous expectations.
In energy trading, US crude rose 3 cents to $82.55 a barrel. Brent crude, the international benchmark, rose 7 cents to $86.38 a barrel.
In currency trading, the US dollar rose to 134.02 yen from 133.75 yen. The price of the euro was at $1.0990, down from $1.0997.