By YURI KAGEYAMA, AP Business Writer
TOKYO (AP) – Asian markets were mostly lower in cautious trading on Monday, while bitcoin’s price remained near the $20,000 mark.
Stocks fell in most Asian markets but rose in Hong Kong and India as concerns over inflation and risks of a global recession stemming from the central bank’s efforts to contain it seemed to outweigh Wall Street’s mostly upbeat finish on Friday . US futures were higher and oil prices also rose.
The price of the world’s most popular cryptocurrency hovered around the psychological benchmark of $20,000 after a rally over the weekend. According to cryptocurrency news site CoinDesk, Bitcoin at one point plummeted nearly 10% to below $18,600.
By late afternoon in Tokyo it was $19,995.60.
China kept interest rates on 1- and 5-year loans unchanged in a widely anticipated move.
With China struggling to bring outbreaks under control and its already faltering economy, “rate cuts are still likely in the coming months as we expect the economic recovery to be slow amid the COVID-zero policies . After this interest rate pause, the government should provide more fiscal stimulus,” said Iris Pang, chief economist for ING Greater China, in a comment.
Japan’s benchmark Nikkei 225 slipped 0.7% to close at 25,771.22. Australia’s S&P/ASX 200 slipped 0.6% to 6,433.40. South Korea’s Kospi fell 2.0% to 6,433.40. Hong Kong’s Hang Seng edged up 0.4% to 21,148.92, while the Shanghai Composite was little changed, slipping less than 0.1% to 3,315.40.
Two of the world’s three largest economies, China and Japan, are not involved in rate hikes, unlike the US Federal Reserve and many other countries’ central banks.
Last week, the Bank of Japan kept interest rates close to zero, despite comments from Bank of Japan Governor Haruhiko Kuroda awaiting clues as to what Tokyo might do about the weakening yen.
A weaker currency can hurt gains for Japan’s export giants like Toyota Motor Corp. benefit, but it can also indicate a weak economy.
Kuroda expressed some concerns about the low yen and its impact on Japanese companies, but said he has no immediate plans to change monetary policy. That means a widening gap between interest rates and investment returns in Japan and the US and continued dollar strength.
“It is inevitable that the US dollar will have to go significantly higher while the Emperor is in place, but as soon as the clothes are gone it will fall. This could be one of the biggest market roller coasters of all time,” said Clifford Bennett, chief economist at ACY Securities, in a comment.
The US dollar was trading at 134.66 Japanese yen, down from 135 yen late Friday. The euro cost $1.0532 versus $1.0489.
US markets are closed on Monday for the June 16 holiday while Federal Reserve Chair Jerome Powell is scheduled to testify before the Senate Banking Committee and House Financial Services Committee later this week.
Wall Street ended a difficult, meandering week mostly higher. The S&P 500 rose 0.2% to 3,674.84. The Dow Jones Industrial Average fell 0.1% to 29,888.78, while the Nasdaq Composite climbed 1.4% to 10,798.35.
The Russell 2000 index of smaller stocks rose 1% to 1,665.69.
Markets are preparing for a world of higher interest rates, led by the Federal Reserve move. Higher interest rates can lower inflation, but they also risk a recession by slowing the economy and pushing down the prices of stocks, bonds, cryptocurrencies, and other assets.
Last week, the Fed raised its short-term interest rate by three times the usual amount for the biggest hike since 1994. It may consider another such mega-hike at its next meeting in July. A report last week on the US economy also showed that industrial production was weaker than expected last month.
The yield on the 10-year government bond fell to 3.23% on Friday from 3.30% late Thursday.
In energy trading, benchmark US crude was up 30 cents to $109.86 a barrel. Brent crude, the international standard, rose 63 cents to $113.75 a barrel.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
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