Asian shares fell on Monday as persistent worries about a possible U.S. debt default and a recession continued to plague the market. U.S. oil and futures prices fell as well.
This week, we will get major updates about the Chinese and Japanese economy. China's slow recovery from the disruptions caused by the COVID pandemic, which restricted travel and other activities, has led to concerns that the country won't be able to provide the growth necessary for other major economies.
In a comment, Yeap Jun Rong said that the sharp decline in China's Economic Surprise Index since the beginning of the month indicates that economic data is turning out less optimistic than previously, which casts some doubt on the markets' reopening betting.
Tokyo's Nikkei gained 0.4%, to 29,507.03.
The Hang Seng Index in Hong Kong fell 0.1% to 19,615.23, while the Shanghai Composite Index dropped 0.9% to 3,243.84. S&P/ASX200 in Australia fell 0.2% to 7,244.70, while the Kospi index in South Korea dropped 0.6% to 2,461.77.
The Group of Seven Advanced Economies finance ministers concluded their weekend meeting in Japan by calling for vigilance, given the many uncertainties facing the global economy.
They also noted that the financial system has shown resilience in spite of recent bank failures in Europe and the U.S. The urgency to resolve the standoff between U.S. president Joe Biden, and Republican legislators over raising the debt limit to enable Treasury to pay their bills was not mentioned.
Wall Street ended the week in relative calm despite the rumblings of the major concerns.
The S&P500 fell 0.2% to 4,124.08 and ended a six-week streak of less than 1% movement. The Dow Jones Industrial Average fell less than 0.1% at 33,300.62 while the Nasdaq Composite lost 0.4% at 12,284.74.
Although the market has been moving in a relatively calm manner, there have been big swings below the surface due to fears of a possible economic recession, high inflation, and the U.S. Government's move towards what could be an extremely catastrophic default.
The University of Michigan's preliminary survey released on Friday revealed a deterioration in consumer sentiment. This is a concern because consumer spending has largely prevented a recession in the face of a slowing economy.
The meeting between President Joe Biden, congressional leaders and the crisis over debt limits was originally scheduled for Friday. It has now been postponed to next week. The delay was seen as a positive sign, and talks at the staff level continued throughout the weekend.
The stock of PacWest Bancorp fell by 3%. Wall Street is looking for the next bank that could fail in the United States after three high-profile failures since March. Last week, its stock fell by 21%.
The soaring interest rates have led some customers to withdraw their bank deposits, in search of higher returns. This has also caused the prices for investments held by banks to fall.
In order to reduce inflation, the Federal Reserve has raised interest rates. Recent reports indicate that inflation has moderated, but it is still too high to be comfortable for regulators and households.
Wall Street hopes that the Fed will hold off on increasing rates at its next meeting, scheduled for June. This would give breathing space to the economy which has been slowed by higher rates and the financial markets where prices have begun to fall.
Other trading on Monday saw benchmark U.S. crude oil lose 47 cents, to reach $69.57 per barrel. On Friday, it fell 83 cents to $70.04 a barrel.
Brent crude, which is the basis of international trading, has dropped 53 cents, to $73.64 a barrel.
The U.S. Dollar rose to 135,97 Japanese yen, up from 135,69 yen Friday. The euro traded at $1.0859 up from $1.0854.