Asian markets mixed on weaker China economic data, U.S. recession worries

TOKYO — Asian shares were trading mixed Monday, as investors eyed disappointing economic data from China as well as surging energy costs and prospects for interest-rate hikes in the U.S.

Japan’s benchmark Nikkei 225
gained 0.4% in morning trading. SoftBank Group
stock rose despite reporting hefty losses on its investments last week. Fast Retailing
owner of retail chain Uniqlo, also rose after falling in previous weeks on worries about the lockdown in China.

In other regional trading, Australia’s S&P/ASX 200
edged up 0.2% while South Korea’s Kospi
fell 0.2%. Hong Kong’s Hang Seng
lost 0.4% and the Shanghai Composite
shed 0.5%. Stocks advanced in Taiwan
while markets in Southeast Asia were closed for holidays.

China on Monday reported disappointing economic-activity data for April, as COVID-19 lockdowns took a toll. Retail sales slumped 11.1% year over year, and industrial production slipped 2.9% from a year ago.

Read: China’s economic activity cools sharply in April

Some analysts worry that if the U.S. Federal Reserve raises interest rates too quickly, or by too much, that could set of a recession. A slowdown in the U.S. would almost certainly hurt the Asian region, which exports and manufacturers for the U.S. economy.

The Fed has said it will continue to raise interest rates to temper rising inflation. The benchmark short-term interest rate was at a record low of near zero during much of the coronavirus pandemic.

“Many others had spotted recession risk out in 2024, but we have been aggressive from the outset in our forecast for a potential U.S. recession this year,” said Clifford Bennett, chief economist at ACY Securities.

Even if concern over interest rate increases has been allayed somewhat, investors are still watching closely for what Fed Chariman Jerome Powell might say next, said Stephen Innes, managing partner at SPI Asset Management.

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

Wall Street ended last week with a broad rally, but the market still recorded its sixth straight weekly drop, the longest such streak since 2011.

The S&P 500
rose 2.4% to 4,023.89. The index is now down 15.6% for the year. The Dow
gained 1.5% to 32,196.66, while the Nasdaq
rose 3.8% to 11,805. Smaller company stocks also staged a solid rally.

The upcoming round of corporate earnings may provide insights into how inflation is affecting businesses and consumers. Several major U.S. retailers report results later this week, including Walmart
and Home Depot

Markets have slumped since late March as traders worry the Fed may not succeed in its delicate mission of slowing the economy to rein in the highest inflation in four decades without causing a recession.

In energy trading, benchmark U.S. crude
lost $1.61 to $108.89 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $4.36 to $110.49 on Friday. Brent crude
the international standard, fell $1.68 to $109.87 a barrel.

In currency trading, the U.S. dollar
edged down to 128.89 Japanese yen from 129.28 yen.

MarketWatch contributed to this report.

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