Asian shares mixed over economic growth, rate worries

Asian markets are trading mixed as worries continue about economic growth, even as some hopes were perked by a recent rise in U.S. bank issues

Asian markets were trading mixed Monday as worries continued about economic growth, even as some hopes were perked by a recent rise in U.S. bank issues.

Traders are also focused on upcoming earnings reports from global companies. Worries continue about inflationary pressures, and how that might affect moves by the Federal Reserve and the world's other central banks on interest rates.

Japan's benchmark Nikkei 225 was little changed, inching down less than 0.1% in morning trading to 28,475.31. Australia's S&P/ASX 200 edged up 0.2% to 7,373.60, while South Korea's Kospi fell 0.2% to 2,565.97. Hong Kong's Hang Seng added 0.2% to 20,488.00. The Shanghai Composite gained 0.9% to 3,368.53.

“Markets suffer from more heat than light as hyper-sensitivity of Fed policy projections to U.S. data continues to infuse out-sized volatility,” said Tan Boon Heng at Mizuho Bank.

China’s central bank kept the one-year medium-term lending facility rate unchanged at 2.75%, suggesting economic growth data to be released Tuesday won't be too alarming.

Stocks on Wall Street ended last week lower as worries about interest rates overshadowed an encouraging start to earnings reporting season.

The S&P 500 fell 8.58 points, or 0.2%, to 4,137.64 after giving up an early gain. The Dow Jones Industrial Average lost 143.22, or 0.4%, to 33,886.47, while the Nasdaq composite sank 42.81, or 0.4%, to 12,123.47.

The S&P 500 still squeezed out a fourth winning week in the last five, built in part on hopes the Federal Reserve may soon end its barrage of rate hikes as inflation cools. High interest rates stifle inflation by slowing the economy, raising the risk of a recession and dragging on prices for investments.

A top Fed official dampened those hopes Friday after saying inflation remains far too high and more tightening may be needed. Christopher Waller, a member of the Fed’s governing board, also said that even after hikes to rates end, they will likely need to stay high for longer than markets expect.

After his comments, traders built bets that the Fed will raise rates at its next meeting in May, instead of taking its first pause in more than a year. Some also began betting the Fed may hike rates again in June, according to data from CME Group.

High-growth stocks tend to be among the most hurt by high rates, and Big Tech stocks were among the heaviest weights on the S&P 500.

Swaths of the economy have already begun slowing under the weight of higher interest rates, raising worries that a recession may be likely. A report on Friday showed U.S. shoppers cut their spending at retailers by more last month than expected. Much of that was due to falling gasoline prices, and the drop for what economists call “core retail sales” wasn't as bad as forecast.

“The Fed’s challenge has been to cool inflation without putting the economy into a deep freeze in the process,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. “The dynamic is still playing out in the markets, and we could see more choppy price action as a result.”

Potentially making things more difficult for the Fed was another report Friday that said U.S. households are girding for higher inflation. Consumers are expecting inflation over the next year of 4.6%, up from expectations for 3.6% a month earlier, according to a preliminary survey by the University of Michigan.

Helping to offset some of the worries about rates were big gains by several of the nation's biggest banks. They reported profits for the first three months of the year that blew past expectations.

In energy trading, benchmark U.S. crude rose 7 cents to $82.59 a barrel. Brent crude, the international standard, added 9 cents to $86.40 a barrel.

In currency trading, the U.S. dollar inched up to 133.85 Japanese yen from 133.75 yen. The euro cost $1.0978, down from $1.0997.