Asian Shares Mixed Over Economic Growth, Rate Worries

TOKYO, Japan (AP) - Asian markets traded mixed on Monday amid continued concerns about the economy. However, some hope was sparked by a recent increase in U.S. banking issues.

Investors are also focusing on the upcoming earnings announcements from multinational companies. Concerns about inflationary pressures and their impact on the Federal Reserve, as well as other central banks around the world, continue to be raised.

Nikkei's benchmark Nikkei was not much changed in the morning trade, with a slight decline of less than 0.1% to 28,475.31. Australia's S&P/ASX200 rose 0.2% to 7,373.60 while South Korea's Kospi dropped 0.2% at 2,565.97. Hong Kong's Hang Seng rose 0.2% to 20,488.00. Shanghai Composite rose 0.9% to 3,368.53.

Tan Boon Heng, Mizuho Bank, said that the markets are suffering from more heat than lights as hyper-sensitivity in Fed policy projections continues to cause outsized volatility.

China's central banks kept the rate of its medium-term lending facility at 2.5% for one year, indicating that Tuesday's economic data will not be alarming.

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The stock market ended the week with a lower closing price as concerns about interest rates overshadowed a positive start to earnings season.

After a brief gain, the S&P 500 dropped 8.58 points or 0.2% to 4,137.64. The Dow Jones Industrial Average fell 143.22 points, or 0.4% to 33,886.47. Meanwhile, the Nasdaq Composite dropped 42.81 points, or 0.4% to 12,123.47.

S&P 500 managed to squeeze out a fourth positive week in five weeks, largely due to the hope that the Federal Reserve will soon stop its rate hikes when inflation begins to cool. High interest rates slow down the economy and increase the risk of recession, while also dragging down the prices for investment.

Top Fed officials dampened hopes on Friday, saying that inflation is still too high and further tightening could be necessary. Christopher Waller, member of the Fed governing board, said that rates will need to remain high even after rate hikes end. This is longer than expected by markets.

Traders placed bets after his remarks that the Fed would raise rates during its next meeting, in May, rather than taking its first break in over a year. Several traders have also begun betting that the Fed will raise rates again in June according to CME Group data.

High rates tend to hurt high-growth stocks the most. Big Tech stocks were the S&P 500's heaviest weights.

The economy has already started to slow down under the pressure of rising interest rates. This is raising concerns that a possible recession could be imminent. According to a report released on Friday, Americans cut back their retail spending more than expected last month. The drop in gasoline prices was a major factor, but the decline for what economists refer to as 'core retail' sales wasn't quite as bad as expected.

Mike Loewengart is the head of Morgan Stanley Global Investment Office's model portfolio construction. He said that the Fed's main challenge was to cool down inflation without freezing the economy. The dynamic is still being played out in the market, and as a consequence we may see choppy prices.

Another report released on Friday said that U.S. consumers are bracing themselves for higher inflation. According to an initial survey conducted by the University of Michigan, consumers expect inflation of 4.6% over the next 12 months, up from 3.6% expectations a month ago.

Several of the country's largest banks have reported huge gains, which helped to ease some of the concerns about interest rates. The banks reported earnings for the first quarter of the year which exceeded expectations.

Energy trading saw benchmark U.S. Crude rise 7 cents to $82.59 per barrel. Brent crude, which is the international standard, rose 9 cents to $86.40 per barrel.

The U.S. Dollar climbed to 133.85 Japanese Yuen in currency trading from 133.75 Japanese Yen. The euro is now $1.0978 instead of $1.0997.