Asian stocks mostly higher as inflation worries dog Wall St

BANGKOK (AP) – Stocks were mostly higher in Asia on Monday after Wall Street ended another bumpy week with mixed performance.

US futures fell as oil prices rose. US markets will remain closed for a public holiday on Monday.

As expected, China left its key interest rate, the Loan Prime Rate, unchanged. The 1-year rate has been held at 3.65%, while the 5-year rate stands at 4.3%.

Hong Kong’s Hang Seng Index was up 0.8% to 20,887.16, while the Shanghai Composite Index was up 1% to 3,255.80. Tokyo’s Nikkei 225 was unchanged at 27,513.45.

South Korea’s Kospi was up 0.3% to 2,458.67 and Australia’s S&P/ASX 200 was up 0.1% to 7,355.00. Shares in Southeast Asian markets fell except for Bangkok, where the SET gained 0.4% in morning trade.

Recent data has reignited concerns that US inflation is not slowing as quickly as hoped. That has dashed hopes that the Federal Reserve could ease up on interest rate hikes and avoid plunging the economy into recession.

That has added to the turmoil on Wall Street after the year started with solid gains.

“There wasn’t much major news, but in the back of every trader’s mind was the thought that this whole ‘hyperinflation/Fed hike’ scenario might not be over as soon as many had hoped,” said Clifford Bennett, chief economist at ACY Securities, in a comment, said, “The troubles may not be over for a long time.”

The S&P fell 0.3% to 4,079.09 after paring a larger loss from the morning. The Dow Jones Industrial Average rose 0.4% to 33,826.69 after rebounding from an early loss. The Nasdaq Composite fell 0.6% to 11,787.27.

Recent reports have shown stronger-than-expected strength in everything from the jobs market to retail sales to inflation itself, raising concerns that the Federal Reserve may need to tighten interest rates. This added resilience has reassured investors that the economy could avoid a worst-case recession.

Jobs are still plentiful and shoppers are still spending to prop up the most important part of the economy, consumer spending. That has helped the S&P 500 index maintain a 6.2% year-to-date gain.

The fear is that if inflation proves more stubborn than expected, the Fed could be pushed to become even more aggressive than it primed the market. Such moves have been most evident in the bond market, where yields have rocketed this month on anticipation of a firmer Fed.

This week, on Thursday, an update on US economic growth in October-December will provide more insight into business and consumer developments. Forecasts assume that growth will have slowed to 2.8% or 2.9% from 3.2% in the previous quarter.

On the other day of trading, US benchmark crude rose 37 cents to $76.92 a barrel in electronic trading on the New York Mercantile Exchange. It fell $2.19 to $76.55 a barrel on Friday.

Brent crude, the price basis for international trade, rose 40 cents to $83.40 a barrel.

The US dollar slipped from 134.28 yen to 134.13 Japanese yen. The euro fell from $1.0681 to $1.0684.

Elaine Kurtenbach, The Associated Press

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