TOKYO (AP) – Asian stocks traded mixed on Tuesday as investors await the week ahead amid reports of some of the market’s biggest concerns, including stubbornly high inflation across the economy.
Japan’s benchmark Nikkei 225 rose 0.7% to 29,141.93 in morning trade. Australia’s S&P/ASX 200 slipped 0.2% to 7,258.80. South Korea’s Kospi slipped 0.4% to 2,503.80. Hong Kong’s Hang Seng slipped 0.3% to 20,241.95, while the Shanghai Composite was up almost 0.2% to 3,399.98.
On Wall Street, the S&P 500 rose less than 0.1% to 4,138.12, posting its worst week in nearly two months. The Dow Jones Industrial Average slipped 0.2% to 33,618.69, while the Nasdaq Composite was up 0.2% to 12,256.92.
A strong read for US jobs, calming worries about a possible recession but raising concerns about high inflation and fears about smaller and mid-sized banks dominated the previous week. Smaller and midsize banks, weighed down by much higher interest rates, are scrambling to reassure Wall Street that their deposits are safe and not at risk of a sudden exodus, similar to the runs that Silicon Valley Bank and others fell.
The markets’ greater concern is that all the turmoil could prompt banks to scale back lending. That, in turn, could increase the risk of a recession, which many investors already see as very likely.
A Federal Reserve report Monday showed that many banks tightened their lending standards in the first three months of the year. In addition, the survey indicated that banks generally expect to raise their standards throughout 2023. Some small and medium-sized banks gave reasons for the forecast, among other things, that they wanted to take fewer risks and were worried about outflows of deposits.
The US Federal Reserve has raised its benchmark interest rate from virtually zero early last year to a range of 5% to 5.25% in hopes of slowing high inflation. High interest rates do this by slowing the economy and hurting investment prices, which poses the risk of a recession if they stay too high for too long.
The Fed said it was unsure of its next move as parts of the economy had shown a sharp slowdown but the job market remained broadly resilient.
Later this week, the US government will release the latest monthly updates on consumer and wholesale inflation. Earnings reports will also come in from Duke Energy, The Walt Disney Co. and News Corp.
Also hanging over the economy is the risk of the US government defaulting on its debt.
Such an event would shake the financial markets as US Treasuries are considered the safest asset in the world. Treasury Secretary Janet Yellen said Sunday on ABC’s This Week that there are “no good options” for the United States to avoid economic “disaster” if Congress fails to raise the nation’s 31,381 credit limit trillions of dollars to raise in the coming weeks.
In the bond market, the yield on the 10-year Treasury rose to 3.51% from 3.44% late Friday. It helps set interest rates on mortgages and other major loans.
Two-year Treasuries, more sensitive to expectations for Fed action, rose to 3.99% from 3.92%.
In energy trading, the US crude index fell 43 cents to $72.73 a barrel. Brent crude, the international standard, fell 47 cents to $76.54 a barrel.
In forex trading, the US dollar rose to 135.08 Japanese yen from 135.04 yen. The euro cost $1.0989 compared to $1.1008.
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AP Business Writer Stan Choe contributed from New York.
Yuri Kageyama, The Associated Press
