Asian shares mostly higher as inflation worries dog Wall St

BANGKOK: Shares were mostly higher in Asia on Monday after Wall Street closed out another bumpy week with a mixed performance.

US futures edged lower, while oil prices advanced. US markets will be closed for a holiday Monday.

China left its benchmark lending rate, the loan prime rate, unchanged as expected. The 1-year rate was kept at 3.65 per cent while the 5-year rate is 4.3 per cent.

Hong Kong's Hang Seng index gained 0.8 per cent to 20,887.16 while the Shanghai Composite index jumped 1 per cent to 3,255.80. Tokyo's Nikkei 225 was unchanged at 27,513.45.

South Korea's Kospi added 0.3 per cent to 2,458.67 and Australia's S&P/ASX 200 edged 0.1 per cent higher to 7,355.00. Shares in Southeast Asian markets declined, apart from in Bangkok, where the SET gained 0.4 per cent in morning trading.

Recent data have revived worries that inflation in the United States is not cooling as quickly as hoped. That has shaken hopes the Federal Reserve might take it easier on interest rate hikes and avoid tipping the economy into recession.

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

“There was not a lot of major news, but in the back of every traders' mind was the thought that this whole high inflation/Fed hiking' scenario, may not actually be over as soon as many hoped,'' Clifford Bennett, chief economist at ACY Securities, said in a commentary. “The troubles may be far from over.'' The S&P fell 0.3 per cent to 4,079.09 after paring a bigger loss from the morning. The Dow Jones Industrial Average rose 0.4 per cent to 33,826.69 after coming back from an early loss. The Nasdaq composite fell 0.6 per cent to 11,787.27.

Reports recently have shown more strength than expected in everything from the job market to retail sales to inflation itself, raising worries that the Federal Reserve will have to get tougher on interest rates. That extra resilience has reassured investors that the economy may 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's helped the S&P 500 index hold onto a gain of 6.2 per cent since the start of the year.

The fear is that if inflation proves stickier than expected, it could push the Fed to get even more aggressive than it's prepared the market for. Such movements have been most clear in the bond market, where yields have soared this month on expectations for a firmer Fed.

This week, an update Thursday on US economic growth in October-December will provide more insight into how businesses and consumers are faring. The forecasts are that growth will have slowed to 2.8 per cent or 2.9 per cent from the previous quarter, down from 3.2 per cent.

In other trading Monday, US benchmark crude oil gained 37 cents to USD 76.92 per barrel in electronic trading on the New York Mercantile Exchange. It sank USD 2.19 on Friday to USD 76.55 per barrel.

Brent crude oil, the pricing basis for international trading, picked up 40 cents to USD 83.40 per barrel.

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