Asian benchmarks mixed as markets watch COVID and inflation risks


TOKYO – Asian stocks were mixed in Monday’s trading as momentum faded from last week’s rally on Wall Street amid mixed sentiments over China’s easing of coronavirus restrictions and increases global interest rates.

Benchmarks fell in Japan, Australia and South Korea, while they rose in Hong Kong but were little changed in Shanghai. Analysts say some investors are encouraged by signs that inflation is falling in the United States sooner than initially thought, as they warn that factors remain that could reignite inflation, including risks geopolitics.

“But it is far too hasty to declare a decisive conclusion on inflation risks,” said Venkateswaran Lavanya of Mizuho Bank.

Japan’s benchmark Nikkei 225 slipped nearly 0.1% in afternoon trade to 28,028.74. Australia’s S&P/ASX 200 edged down nearly 0.2% to 7,146.30. The South Korean Kospi fell 0.1% to 2,480.24. Hong Kong’s Hang Seng gained 1.7% to 17,615.00, while the Shanghai Composite was little changed, falling less than 0.1% to 3,084.72.

“We also have the Democrats holding the Senate while the Republicans seem likely to control the House. Political paralysis in times of economic crisis is not a good preview of what may be in store for us over the next two years. The current rally in equities may only have a few days to go,” said Clifford Bennett, chief economist at ACY Securities, referring to the US midterm election results.

Wall Street closed last week with a rally on hopes that inflationary pressures had eased. This would make the Federal Reserve less likely to continue raising interest rates. But some analysts said the Wall Street rally was overdone.

The S&P 500 rose 36.56 points, or 5.5%, for its best day in more than two years, to 3,992.93. Its 5.9% gain for the week was its third of the past four and its largest since June.

The Dow rose 32.49, or 0.1%, to 33,747.86, and the Nasdaq climbed 209.18, or 1.9%, to 11,323.33. Both also posted strong gains for the week.

Markets are buoyed by China’s easing of some of its tough anti-COVID measures, which have hurt the world’s second-largest economy. The easing of restrictions is translating into potentially higher growth in China, a definite plus for the Asian region.

A report released last week showed that US inflation slowed more than expected last month. The Fed has already raised its key overnight rate to a range of 3.75% to 4%, from virtually zero in March. The likely scenario is still for further increases next year.

In energy trading, benchmark U.S. crude fell 61 cents to $88.35 a barrel. US crude gained 2.9% to $88.96 a barrel on Friday. Brent crude, the international standard, fell 56 cents to $95.43 a barrel.

In currency trading, the US dollar fell from 138.76 yen to 139.48 Japanese yen. The euro traded at $1.0304, down from $1.0356.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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