Global stocks trade mixed as markets eye U.S. interest rates

TOKYO

Global stocks were mixed on Monday as investors watched soaring energy costs and prospects for U.S. interest rate hikes

European benchmarks were trading mixed, with shares up in France and Germany but down in Britain. Stock moves were similar earlier in the day in Asia, where benchmarks ended higher in Japan and Australia but fell in South Korea. Shares rose in Hong Kong but fell in Shanghai.

France’s CAC 40 was down 0.4% in early trading at 6,336.07, while Germany’s DAX was down 0.5% at 13,963.69. Britain’s FTSE 100 rose less than 0.1% to 7,421.33. US stocks are expected to fall with Dow futures down 0.1% at 32,085.00. S&P 500 futures fell 0.3% to 4,006.00.

Some analysts worry that if the US Federal Reserve raises interest rates too quickly or too much, it could trigger a recession. A slowdown in the US would almost certainly hurt the Asian region, which exports and manufactures goods for the US economy.

The Fed said it would continue raising interest rates to temper rising inflation. The benchmark short-term interest rate was at an all-time high near zero for much of the coronavirus pandemic.

“Many others had spotted recession risk in 2024, but we were aggressive early on in our forecast of a possible US recession this year,” said Clifford Bennett, chief economist at ACY Securities.

Japan’s benchmark Nikkei 225 gained 0.5% to end at 26,547.05.

A Bank of Japan report said wholesale inflation rose 10% in April from a year earlier, the highest since comparable records began in 1981. Consumer prices in Japan n haven’t grown at such a rapid pace in recent months. April’s consumer price data is expected to be released later this week.

In other regional trade, Australia’s S&P/ASX 200 edged up 0.3% to 7,093.00. The South Korean Kospi fell 0.3% to 2,596.58. Hong Kong’s Hang Seng recouped its morning losses to rise 0.3% to 19,950.21, while the Shanghai Composite lost 0.3% to 3,073.75.

Even though concerns about interest rate hikes have eased somewhat, investors are still watching closely what Fed Chairman Jerome Powell might say next, said Stephen Innes, managing partner at SPI Asset Management. .

“That doesn’t mean the bear market is over, especially with the recession on everyone’s mind,” Innes said.

The next set of corporate results could provide some insight into how inflation affects businesses and consumers. Several major US retailers are reporting results later this week, including Walmart, Target and Home Depot.

Markets have slumped since late March as traders fear the Fed will fail in its delicate mission to slow the economy to tame the highest inflation in four decades without triggering a recession.

In energy trading, benchmark U.S. crude fell $1.32 to $109.17 a barrel in electronic trading on the New York Mercantile Exchange. It jumped from $4.36 to $110.49 on Friday. Brent, the international standard, fell $1.65 to $109.90 a barrel.

In currency trading, the US dollar rose slightly to 129.41 Japanese yen from 129.28 yen. The Euro traded at $1.0424, down from $1.0402 previously.

___

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