Asian markets are typically down ahead of the US holiday

TOKYO (AP) — Asian markets were mostly down in cautious trading on Monday ahead of a U.S. federal holiday

Concerns about inflation and the risks of a global recession stemming from the central bank‘s efforts to rein it in seemed to outweigh Wall Street’s positive close on Friday.

The price of the world’s most popular cryptocurrency fell back below the psychological benchmark of $20,000 early Monday after hitting $20,742. Bitcoin had plunged nearly 10% to below $18,600 over the weekend, according to cryptocurrency news site CoinDesk.

By mid-afternoon in Tokyo, it was at $19,837.14.

Stocks fell in most major Asian markets but edged higher in China, which, in a widely expected move, left its 1-year and 5-year prime lending rates unchanged.

Given China’s struggle to control outbreaks and its already faltering economy, “rate cuts in the coming months are still likely as we expect the economic recovery to be slow under policy.” COVID-zero. After this rate pause, the government should provide more fiscal stimulus,” said Iris Pang, chief economist for Greater China at ING, in a commentary.

Japan’s benchmark Nikkei 225 slipped 1.7% in morning trade to 25,534.68. Australia’s S&P/ASX 200 slipped 0.7% to 6,432.00. The South Korean Kospi fell 2.1% to 2,389.69. Hong Kong’s Hang Seng edged up 0.2% to 21,109.16, while the Shanghai Composite was little changed, rising less than 0.1% to 3,317.69.

Two of the world’s three largest economies, China and Japan, are not committed to raising interest rates.

Japan’s central bank stuck to its near-zero interest rate policy last week, though comments from Bank of Japan Governor Haruhiko Kuroda were shut down, watched for clues as to what Tokyo could face the weakening of the yen.

A weaker currency can help the profits of Japanese export giants like Toyota Motor Corp., but it can also signal a weak economy.

Kuroda expressed some concerns about the weak yen and its impact on Japanese businesses, but said he had no immediate plans to change monetary policy. This means a growing gap between interest rates and investment returns in Japan and the United States, and the continued strength of the dollar.

“It is inevitable that the US dollar will have to rise significantly as long as there is the Emperor in place, but once the clothes run out, it will come. This could be one of the biggest market roller coaster opportunities of all time,” Clifford Bennett, chief economist at ACY Securities, said in a commentary.

The U.S. dollar was trading at 134.88 Japanese yen early Monday, down from 134.96 yen. The euro traded at $1.0526, down from $1.0498.

US markets are closed on Monday for the June 16 holiday. But Federal Reserve Chairman Jerome Powell’s monetary policy testimony before the Senate Banking Committee and the House Financial Services Panel is scheduled for later this week.

Wall Street closed a tough winding week, up slightly. 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 Small Stock Index rose 1% to 1,665.69.

Markets brace for a world of higher interest rates, led by the Federal Reserve’s decision. Higher rates can lower inflation, but they also risk a recession by slowing the economy and lowering the prices of stocks, bonds, cryptocurrencies, and other investments.

Last week, the Fed raised its main short-term interest rate to three times the usual amount for its biggest increase since 1994. It may be eyeing another mega-hike at its next meeting in July. A report released last week on the US economy also showed industrial production was weaker than expected last month.

The 10-year Treasury yield fell to 3.23% on Friday from 3.30% Thursday evening.

In energy trading, benchmark U.S. crude fell 36 cents to $109.20 a barrel. Brent crude, the international standard, fell 42 cents to $112.70 a barrel.


Yuri Kageyama is on Twitter

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