TOKYO ( Associated Press) — Asian stocks mostly fell Monday, though Japan’s benchmark index rallied, welcoming a landslide victory in parliamentary elections by the ruling Liberal Democratic Party.
Concerns about global inflation and disruptions to economic activity caused by the coronavirus pandemic are weighing on investor sentiment.
The tide may be turning as more and more market players focus on the economic outlook, Stephen Innes of SPI Asset Management said in a commentary.
“A recession is not the market’s baseline outlook, but until proven otherwise, investors will debate the depth of affected growth, not the likelihood of a recession; therefore, good economic data is good news for stocks,” he said.
Japan’s benchmark Nikkei jumped 1.1% in morning trading at 26,803.30.
Japan’s ruling party and its coalition partner won a major victory in Sunday’s vote. which came two days after the assassination of former Prime Minister Shinzo Abe. Abe was shot by a man emerging from the crowd listening to his campaign speech, pulled out a homemade gun and fired.
The attack shocked a nation that rarely sees gun violence. The Liberal Democratic Party was poised for victory even before the assassination, but some analysts said the shock of Abe’s death would likely strengthen that trend.
With its partner, the Komeito party, the ruling coalition raised their combined share of the upper house from 248 seats to 146. Prime Minister Fumio Kishida is almost certain to rule uninterrupted until elections scheduled for 2025, ensuring that defense and pro-US diplomacy The policies of the late Abe and the Liberal Democrats will continue unchanged.
Australia’s S&P/ASX 200 fell 0.6% to 6,638.20. South Korea’s Kospi lost 0.3% to 2,342.82.
Hong Kong’s Hang Seng fell 2.7% to 21,144.53, while the Shanghai Composite fell 1.5% to 3,307.23. Technology shares fell after market regulators in China fined companies for failing to report past transactions as required.
Wall Street had a choppy end last week as global markets turned their attention to Chinese economic indicators and moves by central banks, including the US Federal Reserve, to rein in stubbornly rising inflation.
The hotter the US economy stays, the more likely it is that the Federal Reserve will continue to raise interest rates.
A strong hiring report for June allayed fears that the US economy could be on the brink of a recession and highlighted the resilience of the nation’s labor market.
But government figures released on Friday also highlighted the stark divide between the healthy labor market and the rest of the economy: Inflation soared to 40-year highs, consumers increasingly pessimistic, sales of Housing and manufacturing are weakening and the economy may actually have slowed for the last six months.
The Fed has already raised its key overnight rate three times this year, and the hikes have become increasingly aggressive. Last month, it raised rates to the highest level since 1994, by three-quarters of a percentage point to a range of 1.50% to 1.75%. It was practically at zero in March.
Other central banks around the world are also raising interest rates and scrapping contingency plans put in place early in the pandemic to prop up financial markets.
On Friday, the S&P 500 fell 0.1% to 3,899.38, snapping a four-day winning streak. The Dow fell 0.1% to 31,388.15, while the Nasdaq rose 0.1% to 11,635.31. The Russell 2000 index of small-company shares fell less than 0.1% to 1,769.36.
In energy trading, benchmark US crude fell 79 cents to $104.00 a barrel. It gained $2.06 at $104.79 a barrel on Friday.
Brent crude, the international standard, fell 74 cents to $106.28 a barrel.
In currency trading, the US dollar rose to 137.03 Japanese yen from 136.10 yen. The euro cost $1.0148, down from $1.0182.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama