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Global shares trading mixed as markets eye US interest rates

TOKYO (AP) – Global shares were mixed yesterday, as investors eyed surging energy costs and prospects for interest rate hikes in the United States (US).

European benchmarks were trading mixed, with shares up in France and Germany but down in Britain. Stock moves were similar earlier in the day in Asia, where benchmarks finished higher in Japan and Australia, but fell in South Korea. Shares rose in Hong Kong but declined in Shanghai.

France’s CAC 40 declined 0.4 per cent in early trading to 6,336.07, while Germany’s DAX shed 0.5 per cent to 13,963.69. Britain’s FTSE 100 was up less than 0.1 per cent at 7,421.33. US shares were set to drift lower with Dow futures down 0.1 per cent at 32,085.00. S&P 500 futures fell 0.3 per cent to 4,006.00.

Some analysts worry that if the US Federal Reserve raises interest rates too quickly, or by too much, that could set of a recession. A slowdown in the US would almost certainly hurt the Asian region, which exports and manufactures goods for the US 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 US recession this year,” said Chief Economist Clifford Bennett at ACY Securities.

Japan’s benchmark Nikkei 225 gained 0.5 per cent to finish at 26,547.05.

A man walk in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm. PHOTO: AP

A Bank of Japan report said wholesale inflation rose a record 10 per cent in April from the previous year, the highest since comparable records began in 1981. Japan’s consumer prices have not risen at such a brisk pace in recent months. April consumer prices data are due out later this week.

In other regional trading, Australia’s S&P/ASX 200 edged up 0.3 per cent to 7,093.00. South Korea’s Kospi fell 0.3 per cent to 2,596.58. Hong Kong’s Hang Seng recouped morning losses to rise 0.3 per cent to 19,950.21, while the Shanghai Composite shed 0.3 per cent to 3,073.75.

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

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

The upcoming round of corporate earnings may provide insights into how inflation is affecting businesses and consumers. Several major US retailers report results later this week, including Walmart, Target and Home Depot.

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 inflation without causing a recession.

In energy trading, benchmark US crude lost USD1.32 to USD109.17 a barrel in electronic trading on the New York Mercantile Exchange. It jumped USD4.36 to USD110.49 last Friday. Brent crude, the international standard, fell USD1.65 to USD109.90 a barrel.

In currency trading, the US dollar edged up to JPY129.41 from JPY129.28.