Asian shares were mostly lower Monday, dogged by persisting worries over a possible recession and the risk of a default on the U.S. national debt. U.S. futures and oil prices also fell.
This week will bring major updates on the Chinese and Japanese economies. China's faltering rebound from disruptions caused by limits on travel and other activities during the COVID-pandemic has raised worries that it won't provide the sort of growth needed to offset slowdowns in other major economies.
“The sharp moderation in China’s economic surprise index since the start of the month suggests that economic data are turning in less optimistic than before, which puts some doubts on markets’ reopening bets,” Yeap Jun Rong, a market analyst at IG, said in a commentary.
Tokyo's Nikkei 225 bucked the regional trend, gaining 0.4% to 29,507.03.
Hong Kong's Hang Seng index edged 0.1% lower to 19,615.23 and the Shanghai Composite index sank 0.9% to 3,243.84. Australia's S&P/ASX 200 lost 0.2% to 7,244.70 while the Kospi in South Korea shed 0.6% to 2,461.77.
Over the weekend, finance ministers of the Group of Seven advanced economies wrapped up a meeting in Japan with a call for vigilance given many uncertainties for the global economy.
However, they also said financial systems have shown resilience despite recent failures of several banks in the U.S. and Europe. No mention was made of the urgency of resolving a standoff between U.S. President Joe Biden and Republican lawmakers over raising the debt ceiling to enable the Treasury to pay its bills.
Friday brought a quiet close on Wall Street despite the big worries roiling under the surface.
The S&P 500 dipped 0.2% to 4,124.08, capping a sixth straight week where it moved less than 1%. The Dow Jones Industrial Average slipped less than 0.1% to 33,300.62, while the Nasdaq composite lost 0.4% to 12,284.74.
Despite seemingly placid moves for the overall market, big swings have swirled underneath the surface amid worries about a possible recession, high inflation and the U.S. government inching toward what could be a catastrophic default on its debt.
A preliminary survey by the University of Michigan released Friday showed sentiment among consumers tumbling. That's a worry because strong consumer spending has been one of the main forces preventing a recession as the economy slows.
President Joe Biden and congressional leaders postponed a meeting set for Friday on the debt limit crisis to next week. The delay was billed as a sign of positive exchanges, and staff-level talks continued through the weekend.
PacWest Bancorp’s stock fell 3%. It’s been under heavy scrutiny as Wall Street hunts for the next possible U.S. bank to fail following three high-profile collapses since March. Its stock lost 21% last week.
Surging interest rates have caused some customers to pull bank deposits in search of higher yields while also dragging down prices for the investments that the banks hold.
The Federal Reserve has been hiking interest rates to drive down inflation. Recent reports suggest price increases are moderating though inflation is remains too high for the comfort of households and regulators.
The hope on Wall Street is that easing inflation may convince the Fed to hold off on raising rates again at its next meeting in June. That would offer some breathing room to both the economy, which has slowed under the weight of higher rates, and to financial markets, where prices began falling long ago.
In other trading Monday, U.S. benchmark crude oil gave up 47 cents to $69.57 per barrel. It lost 83 cents on Friday to $70.04 per barrel.
Brent crude, the pricing basis for international trading, shed 53 cents to $73.64 per barrel.
The U.S. dollar rose to 135.97 Japanese yen from 135.69 yen on Friday. The euro was trading at $1.0859, up from $1.0854.