HONG KONG, May 23 — Asian stocks faced an uncertain start on Monday as persistent inflation fears and the prospect of rising interest rates dogged the global economic outlook, which remains mired in negative sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.04 per cent higher, after US stocks ended the previous session with negligible gains for the day. The index is down 3.6 per cent so far this month.
In early trade, Australian shares gained 0.2 per cent while Japan’s Nikkei stock index was 0.85 per cent higher.
The yield on benchmark 10-year Treasury notes US10YT=RR rose to 2.7883 per cent from its US close of 2.787 per cent on Friday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 2.5869 per cent, up from 2.583 per cent.
Uncertainty in market sentiment this week follows the S&P 500’s meagre gains on Friday of just 0.01 per cent.
The Nasdaq declined 0.30 per cent while the Dow Jones Industrial Average rose 0.03 per cent.
Despite the marginal gains, the S&P 500 and the Nasdaq recorded their seventh straight weeks of losses, the longest losing streak since the end of the dotcom bubble in 2001.
The Dow suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression.
Inflationary pressures remain top of mind for investors, given German wholesale inflation figures published on Friday showed a higher than expected jump indicating prices will remain elevated in the short term future.
Germany’s producer price index for April rose 2.8 per cent for the month, which meant annual growth was a persistently high 33.5 per cent.
In Australia, the Labour Party ended a near 10 year rule of conservative government at a general election on the weekend.
While Labour has promised climate, housing and enhanced social welfare reforms analysts do not believe the change in government will crate major implications for the nation’s economy.
“In our view there was little proposed by the incoming government during the election campaign that at this stage requires us to revisit our economic forecasts,” CBA economists wrote on Monday.
“Put another way, our economic forecasts and call on the RBA are unchanged despite the change of national leadership.” In early Asian trade, the dollar rose 0.04 per cent against the yen to 127.9. It is still some distance from its high this year of 131.34 on 2022-05-09.
US crude dipped 0.04 per cent to US$110.24 (RM484.01) a barrel. Brent crude rose 0.23 per cent to US$112.68 per barrel.
The concerns over global economic growth has prompted renewed support for gold.
“Gold prices saw the first weekly gain since mid-April as safe haven demand was boosted by concerns over economic growth amid high inflation,” ANZ analysts said in a research note on Monday. “A weaker US dollar has also boosted investor appetite.” Spot gold was 0.3 per cent higher early Monday at US$1847.0226 per ounce. — AFP
