Shares mixed in Asia in cautious trading after Wall Street fell on the edge of a bear market Friday.
Tokyo and Sydney were higher on Monday while Hong Kong and Shanghai declined.
Investors were waiting for minutes from the Federal Reserve’s latest policymaking meeting and updates on consumer prices later this week.
On Friday, the S&P 500 lost more than 20% from its peak set earlier this year, before making little gains from buying late in the day. It was 18.7% less than its record. This marked a seventh consecutive 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 All are penalizing stocks and raising fears about a potential US recession,
The Nikkei 225 rose 0.5% to 26,868.02 in Tokyo. President Joe Biden’s visits to Japan and South Korea resulted in the launch of a US initiative on economic cooperation and security.
Called the Indo-Pacific Economic Framework, the White House said it would help the United States and Asian economies to work more closely on issues including supply chains, digital trade, clean energy, worker safety and anti-corruption efforts.
However, the details still need to be negotiated among member states, leaving it unclear how the framework can help American workers and businesses while serving the interests of partner countries.
South Korea’s Kospi remained unchanged at 2,639.58.
Australia’s S&P/ASX 200 gained 0.1% to end at 7,154.70. Australia’s centre-left opposition toppled the Conservative government on Saturday After being in power for almost a decade.
Anthony Albanese was sworn in as prime minister after his Labor Party won its first electoral victory since 2007. Labor has promised more financial aid and a stronger social safety net as Australia grapples with the worst inflation and rising housing prices since 2001.
But analysts said the policy stance of the newly-elected administration was not much different from that of the current government and major changes were not expected.
“While it is possible that Labor will represent a slightly more financially supportive government than its predecessors, we do not see many implications for financial markets from this election result,” economists at ING Economics said in a commentary.
Hong Kong’s Hang Seng index fell 1.4% to 20,424.23, while the Shanghai Composite Index fell 0.4% to 3,133.38.
On Friday, the S&P 500 closed 0.57 points higher at 3,901.36. The Dow Jones Industrial Average rose less than 0.1% to 31,261.90. The Nasdaq Composite was down 0.3% at 11,354.62 with a major loss.
Several big tech stocks, considered the most vulnerable to rising interest rates, have already fallen more than 20% this year. This includes a drop of 37.2% for Tesla and 69.1% for Netflix.
This marks a sharp turn from Wall Street’s powerful run since emerging from its last bear market in early 2020, at the start of the pandemic.
With inflation at its highest level in four decades, the Fed has switched from keeping interest rates super-low to support the markets and the economy, raising rates and taking other steps to reduce inflation. The concern is that it may go too far or too quickly.
Economists at Goldman Sachs recently put the likelihood of a US recession over the next two years at 35%.
Inflation has been very high for months. But market concerns were heightened after Russia’s invasion of Ukraine, as prices at grocery stores and gasoline pumps rose further, as the region is a major source of energy and grain.
Increasing pressure on stocks is a sign that corporate profits are slowing down and may eventually suffer from inflation.
In other trade, US benchmark crude oil rose 47 cents to $110.75 a barrel in electronic trading on the New York Mercantile Exchange. It rose 39 cents to $110.28 on Friday.
Brent crude, used as a pricing basis for international trade, rose 67 cents to $113.22 a barrel.
The US dollar fell from 127.87 yen to 127.29 Japanese yen late on Friday. The euro rose from $1.0564 to $1.0593.