Associated Press

May 16, 2022, 12:10 a.m. EDT

Asian markets mixed on weaker China economic data, U.S. recession worries

By Associated Press

TOKYO — Asian shares were trading mixed Monday, as investors eyed disappointing economic data from China as well as surging energy costs and prospects for interest-rate hikes in the U.S.

Japan’s benchmark Nikkei 225 (NIKKEI:JP:NIK) gained 0.4% in morning trading. SoftBank Group (TKS:JP:9984) stock rose despite reporting hefty losses on its investments last week. Fast Retailing (TKS:JP:9983) , owner of retail chain Uniqlo, also rose after falling in previous weeks on worries about the lockdown in China.

In other regional trading, Australia’s S&P/ASX 200 (S&P:AU:XJO) edged up 0.2% while South Korea’s Kospi (KOREA:KR:180721) fell 0.2%. Hong Kong’s Hang Seng (HONG:HK:HSI) lost 0.4% and the Shanghai Composite (SHG:CN:SHCOMP) shed 0.5%. Stocks advanced in Taiwan (TAIWAN:TW:Y9999) , while markets in Southeast Asia were closed for holidays.

China on Monday reported disappointing economic-activity data for April, as COVID-19 lockdowns took a toll. Retail sales slumped 11.1% year over year, and industrial production slipped 2.9% from a year ago.

Read: China’s economic activity cools sharply in April

Some analysts worry that if the U.S. Federal Reserve raises interest rates too quickly, or by too much, that could set of a recession. A slowdown in the U.S. would almost certainly hurt the Asian region, which exports and manufacturers for the U.S. economy.

The Fed has said it will continue to raise interest rates to temper rising inflation. The benchmark short-term interest rate was at a record low of near zero during much of the coronavirus pandemic.

“Many others had spotted recession risk out in 2024, but we have been aggressive from the outset in our forecast for a potential U.S. recession this year,” said Clifford Bennett, chief economist at ACY Securities.

Even if concern over interest rate increases has been allayed somewhat, investors are still watching closely for what Fed Chariman Jerome Powell might say next, said Stephen Innes, managing partner at SPI Asset Management.

“That does not mean the bear market is over, especially with the recession on everyone’s mind,” Innes said.

Wall Street ended last week with a broad rally, but the market still recorded its sixth straight weekly drop, the longest such streak since 2011.

The S&P 500 (S&P:SPX) rose 2.4% to 4,023.89. The index is now down 15.6% for the year. The Dow (DOW:DJIA) gained 1.5% to 32,196.66, while the Nasdaq (NASDAQ:COMP) rose 3.8% to 11,805. Smaller company stocks also staged a solid rally.

The upcoming round of corporate earnings may provide insights into how inflation is affecting businesses and consumers. Several major U.S. retailers report results later this week, including Walmart (NYS:WMT) , Target (NYS:TGT) and Home Depot (NYS:HD) .

Markets have slumped since late March as traders worry the Fed may not succeed in its delicate mission of slowing the economy to rein in the highest inflation in four decades without causing a recession.

In energy trading, benchmark U.S. crude lost $1.61 to $108.89 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $4.36 to $110.49 on Friday. Brent crude , the international standard, fell $1.68 to $109.87 a barrel.

In currency trading, the U.S. dollar (XTUP:USDJPY) edged down to 128.89 Japanese yen from 129.28 yen.

MarketWatch contributed to this report.

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