Asian stocks were mixed on Monday as traders looked ahead to the Federal Reserve's summer conference for signs of whether the US central bank thinks inflation is under control or more interest rate hikes are needed to cool inflation.
Shanghai and Hong Kong retreated while Tokyo and Seoul advanced. Oil prices rose.
Wall Street's benchmark S and P 500 index edged down 0.1 per cent on Friday to end the week lower ahead of the Jackson Hole, Wyoming, conference. Traders are watching because Fed officials have used the event in the past to indicate changes in policy direction.
There “may be rude hawkish surprises” for investors who assume rate hikes are finished, said Tan Boon Heng of Mizuho Bank in a report. Chair Jerome Powell “may allude to structurally higher (and potentially more volatile) inflation being the new norm".
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The Shanghai Composite Index lost 0.3 per cent to 3,122.67 while the Nikkei 225 in Tokyo advanced 0.6 per cent to 31,626.56. The Hang Seng in Hong Kong lost 1.1 per cent to 17,760.29.
The Kospi in Seoul gained 0.6 per cent to 2,518.44 while Sydney's S and P-ASX 200 shed 0.2 per cent to 7,137.10.
New Zealand, Singapore and Bangkok retreated while Singapore gained.
On Wall Street, the S and P 500 declined to 4,369.71 on Friday. The Dow Jones Industrial Average added 0.1 per cent to 34,500.66. The Nasdaq composite slipped 0.2 per cent to 13,290.78.
The S and P 500 soared in the first seven months of 2023 but has given back more than one-quarter of those gains after critics warned the market embraced the notion too early that inflation was under control and rate hikes were finished.
Some investors are shifting money to bonds as higher interest rates make their payout bigger and less risky.
Microsoft slipped 0.1 per cent on Friday. Alphabet dropped 1.9 per cent and Tesla sank 1.7 per cent.
Tech and other high-growth stocks are seen as some of the biggest losers due to higher rates. Several are down more than 10 per cent from this year's highs.
Data indicating US consumer spending and hiring are unexpectedly strong have fueled expectations the Fed might feel pressure to keep its benchmark lending rate higher for longer.
Inflation has declined from its peak above 9 per cent last year but still is above the Fed's 2 per cent target. Consumer prices rose 3.2 per cent in July over a year earlier, up from the previous month's 3 per cent increase.
Economists say the last stage of getting inflation down to the Fed's target may prove the most difficult.
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On Friday, Ross Stores jumped 5 per cent for the largest gain in the S and P 500 after it reported stronger results than expected. Estee Lauder fell 3.3 per cent despite reporting stronger profit and revenue than expected. Its profit forecast for its upcoming fiscal year fell short of Wall Street's estimates.
In energy markets, benchmark US crude gained 73 cents to USD 81.39 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, advanced 75 cents to USD 85.55 per barrel in London.
The dollar edged up to 145.35 yen from Friday's 145.32 yen. The euro rose to USD 1.0882 from USD 1.0878.
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