Asian stocks mixed after China’s warning on risks and stagflation

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A man walks past the electronic board of a securities firm in Tokyo on Monday, November 22, 2021. Stocks were mixed in Asia on Monday after ending the week largely down on Wall Street, despite the first Nasdaq close above 16,000. (AP Photo / Koji Sasahara)

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Stocks were mixed in Asia on Monday after ending the week largely lower on Wall Street, despite the Nasdaq’s first close above 16,000.

A resurgence of coronavirus outbreaks in the United States, Europe and some other regions is weighing on investor sentiment. Meanwhile, comments from Chinese central bank advisers about the risks of “stagflation” have heightened concerns about inflationary pressures.

The Shanghai Composite Index gained 0.7% to 3,583.37, while the Hong Kong Hang Seng lost 0.4% to 24,962.11.

Tokyo’s Nikkei 225 fell 0.1% to 29,717.58. In Australia, the S & P / ASX 500 lost 0.4% to 7,368.00.

Shares fell in India but rose in Taiwan.

Attention has turned to the People’s Bank of China as Beijing works to limit the risks of excessive borrowing by real estate developers while maintaining economic growth.

PBOC adviser Liu Shijin told a conference this weekend that China must avoid “near stagflation,” Bloomberg reported.

Another economist, Jia Kang, echoed this sentiment, saying that if the pace of economic growth is slower than the rate of inflation, “then how can we formulate a prescription for macro-control?”

Nomura’s Ting Lu noted that controls on home loans, new waves of COVID-19 epidemics and strict policies to combat them and soaring prices are all adding to China’s political challenges.

“A series of memos and political reports show that Beijing is increasingly concerned about slowing growth and has started to take steps to change its political stance to prevent growth from falling further,” he said. Ting said in a report.

On Friday, the S&P 500 index was down 0.1% to 4,697.96 and the Dow Jones Industrial Average was down 0.8% to 35,601.98.

The Nasdaq added 0.4% to 16,057.44, for its sixth consecutive gain.

Small business stocks fell more than the broader market. The Russell 2000 Index lost 0.9% to 2,343.16.

Despite a checkered week, the S&P 500 and Nasdaq posted weekly gains, while the Dow Jones recorded its second consecutive weekly loss.

Some 66% of S&P 500 companies fell, with financials and energy stocks accounting for much of the decline. These losses have outpaced technological gains and a mix of businesses that depend on consumer spending.

Energy-related stocks fell as US crude oil prices fell 3.7%.

U.S. stocks have mostly risen since early October, with companies reporting much higher summer profits than analysts expected, with overall earnings growth of around 40%. This is much better than the 23% growth forecast made in June.

Yet companies face higher raw material costs and supply chain issues that could reduce their future profits. Consumers have so far absorbed the higher prices, but analysts fear they will start saving if the higher prices persist for too long.

The situation is pushing the Federal Reserve to act more quickly to curb its ultra-low interest rate policies in order to combat rising prices. Bank of America analysts on Friday predicted that the Fed will likely start raising its benchmark interest rate in the second quarter of 2022, two quarters earlier than expected.

Investors are waiting to see if President Joe Biden decides to keep Jerome Powell at the helm of the Fed.

Biden is expected to announce in a few days who he will choose for the most powerful economic position in the country. Many Fed watchers expect Powell to be offered a second term, although Lael Brainard, a member of the Fed’s Board of Governors, has established himself as a top alternative.

In other exchanges, the US benchmark crude oil gained 3 cents to $ 75.97 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis of international pricing, fell 5 cents to $ 78.84 a barrel.

The US dollar climbed to 114.15 Japanese yen from 113.96 yen on Friday. The euro slipped to $ 1.1278 from $ 1.1289.

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