Stock markets: Asian markets mixed after warnings about China’s risks, stagnant inflation

Asian stock markets were mixed on Monday after ending the week mostly lower on Wall Street, despite Nasdaq’s first close above 16,000.

The resurgence of the coronavirus outbreak in the US, Europe and several other regions is weighing on investor sentiment. Meanwhile, comments by advisers to China’s central bank on the risks of “stagflation” reinforced concerns about inflationary pressures.

The Shanghai Composite Index gained 0.7% to 3,583.37, while the Hang Seng index in Hong Kong lost 0.4% to 24,962.11.

Tokyo’s Nikkei 225 fell 0.1% to 29,717.58. In Australia, the S&P/ASX 500 rose 0.4% to 7,368.00.

Shares fell in India but rose in Taiwan.

Attention has turned to the People’s Bank of China as Beijing tries to limit risks from property developers borrowing too much while keeping the economy growing.

A PBOC adviser, Liu Shijin, told a conference over the weekend that China needed to avoid “nearly stagnant inflation,” Bloomberg reported.

Another economist, Jia Kang, echoed that view, saying that if economic growth is slower than inflation, “how can we form a prescription for macro control?” ?”

Nomura’s Ting Lu notes that controls on real estate lending, the new wave of COVID-19 outbreaks, and strict policies to combat them and rising prices are all China’s policy challenge.

A series of meeting memos and policy reports show that Beijing is increasingly concerned about a slowdown in growth and has begun to act to change its policy stance to prevent growth from sliding further. long,” Ting said in a report.

On Friday, the S&P 500 rose 0.1% to 4,697.96 and the Dow Jones Industrial Average fell 0.8% to 35,601.98.

Nasdaq rose 0.4 percent to 16,057.44, its sixth straight gain.

Shares of smaller companies fell more than the broader market. The Russell 2000 index lost 0.9% to 2,343.16.

Despite a week of ups and downs, the S&P 500 and Nasdaq posted weekly gains, while the Dow recorded its second consecutive weekly loss.

About 66% of companies in the S&P 500 fell, with financials and energy stocks accounting for a large part of the decline. Those losses outweigh the gains in technology and a combination of companies that rely on consumer spending.

Energy-related shares fell as US crude prices fell 3.7%.

US stocks have mostly edged higher since early October as companies reported much stronger-than-expected summer profits, with overall earnings growth around 40%. . This is much better than the 23% growth forecast given in June.

However, companies are facing higher raw material costs and supply chain issues that could reduce profits in the future. Consumers have so far absorbed higher prices, but analysts fear they could start to save if higher prices persist for too long.

The situation is pressuring the Federal Reserve to move faster to rein in ultra-low interest rate policies to combat rising prices. On Friday, analysts at Bank of America predicted that the Fed will likely begin raising its benchmark interest rate in the second quarter of 2022, two quarters earlier than previously forecast.

Investors are waiting to see if US President Joe Biden decides to keep Jerome Powell at the helm of the Fed.

Biden is expected to announce within the next few days who he will choose for the nation’s most powerful economic post. Many Fed watchers expect Powell to be nominated for a second term, although Lael Brainard, a member of the Fed’s Board of Governors, has emerged as a leading replacement.

In other trading, benchmark U.S. crude rose 3 cents to $75.97 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for international pricing, lost 5 cents to $78.84 a barrel.

The US dollar rose to 114.15 Japanese yen from 113.96 yen on Friday. The euro fell to $1.1278 from $1.1289.

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