Shanghai shares rose as investors returned from a weeklong Lunar New Year holiday.
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Asian stocks were mixed on Monday as traders struggled to maintain momentum from last week’s rally, even as regional Chinese markets reopened after a week-long Lunar New Year holiday.
Even a strong performance on Wall Street wasn’t enough, as data showed the Federal Reserve’s preferred inflation gauge rose at its slowest pace in more than a year.
The reading showed dealers raised interest rates by 25 basis points this week, down from a half-point hike last month, following four straight 75-point hikes.
The European Central Bank and Bank of England will also announce decisions this week.
The meetings come as a series of recent data show inflation has eased from multi-decade highs as policymakers’ monetary tightening campaign last year begins to kick in.
But there’s plenty of panic on the trading floor that economies could still slide into recession, and a mixed earnings season so far has threatened company profits.
US Treasury Secretary Janet Yellen said she was happy to see inflation slowing, but was cautious about the outlook for the economy.
“I’m reasonably satisfied with the data I’ve seen so far, but I don’t want to discount the risk of a recession because the Fed’s rate hikes are slowing the economy,” she told Bloomberg News.
That worry is dampening optimism in Asia about a strong recovery as it emerges from China’s zero-infection period this year.
Strong travel and last week’s holiday signs have added to the upbeat sentiment, coupled with evidence that there has been no spike in Covid cases since then, suggesting the disease may now be under control.
As Shanghai resumed trading, Tokyo, Taipei, Jakarta and Wellington rose, although Hong Kong, Sydney, Seoul, Singapore and Manila slipped.
Chinese markets are “underperforming Hong Kong and US markets during the Chinese New Year,” said Wheeler Chen at Forsyth Bar Asia.
“The market is very excited about holiday information.”
Oil prices rose on expected demand as China emerged from years of strict Covid controls.
News of a drone attack on the site of Iran’s Ministry of Defense had little impact on the commodity market.
Stephen Ince of SPI Asset Management said: “While oil prices have been buoyed by headlines, the risk to global supply currently appears limited.
“Iran’s oil production facilities are mainly located in the southwestern part of the country and have not been targeted by the current attacks.
“Iran is a marginal global crude exporter, and any significant disruption could be offset by newly created OPEC spare capacity.”
Traders are monitoring developments as any escalation could see disruption to the key transit point along the Hormuz coast, he added. However, observers see such a case as unlikely for now, he added.
Tokyo – Nikkei 225: Up 0.3 percent at 27,473.75 (break)
HONG KONG – Hang Seng Index: Down 0.7 percent at 22,533.08
Shanghai Composite: Up 0.6 percent at 3285.65
Dollar/yen: Up at 130.14 yen from 129.80 yen on Friday
EUR/USD: At $1.0871, down from $1.0874
Pound/Dollar: Down at $1.2391 from $1.2395
EUR/Pound: Up at 87.75 pence from 87.65 pence
West Texas Intermediate: Up 0.2 percent at $79.87 a barrel
Brent North Sea crude: up 0.2 percent at $86.60 a barrel.
NEW YORK – Dow: Up 0.1 percent at 33,978.08 (close)
London – FTSE 100: FLAT at 7,765.15 (rounded)