San Francisco Frontiers - Asian markets rise but rate concerns cast shadow

Equities have struggled to build on January's rally, with recent data showing that the Federal Reserve still had plenty of work to do to get prices under control.

Investors are now awaiting the release of minutes from the central bank's most recent policy meeting, hoping to gauge officials' views on their next steps.

Sentiment was given a jolt last week by comments from some members who said they were open to a 50-basis-point hike at the next gathering.

Several others have already warned that borrowing costs would likely have to go higher and stay there for longer to tame inflation, which has eased but remains elevated.

That has renewed concerns that the world's top economy could tip into recession, with commentators warning earnings will also take a hit.

Asian markets fluctuated following a mixed day on Wall Street on Friday.

Shanghai led gains, jumping more than two percent as banking giant Goldman Sachs said it saw mainland Chinese stocks surging this year as the country reopens from zero-Covid and economic activity kicks on.

"The growth impulse should be heavily tilted towards the consumer economy, where (the) services sector is still operating significantly below the 2019 pre-pandemic levels," strategists at the bank said.

Hong Kong, Tokyo, Seoul, Sydney, Bangkok and Taipei rose though Mumbai, Singapore, Manila, Jakarta and Wellington fell.

Analysts warned that while traders expect further rate hikes, there could be more bad news down the line.

National Australia Bank's Tapas Strickland said: "The equity market so far seems sanguine about the rates outlook, seemingly taking more signal from the better than expected macro data, than from what that then means for rates and getting inflation down."

And Michael Wilson at Morgan Stanley said companies faced an earnings recession.

"The bear market rally that began in October from reasonable prices and low expectations has morphed into a speculative frenzy based on a Fed pause/pivot that isn't coming," he wrote in a note.

The likelihood of more rate hikes provided further support to the dollar, which held Friday's gains against its major peers, sitting around highs not seen since December.

While oil edged up Monday following hefty losses last week, the stronger dollar kept a lid on prices, with concerns about the impact of a possible recession on demand adding to downward pressure.

- Key figures around 0700 GMT -

Tokyo - Nikkei 225: UP 0.1 percent at 27,531.94 (close)

Hong Kong - Hang Seng Index: UP 1.0 percent at 20,928.18

Shanghai - Composite: UP 2.1 percent at 3,290.34 (close)

Dollar/yen: UP at 134.24 yen from 134.17 yen on Friday

Euro/dollar: DOWN at $1.0690 from $1.0697

Pound/dollar: UP at $1.2033 from $1.2045

Euro/pound: UP at 88.85 pence from 88.79 pence

West Texas Intermediate: UP 0.7 percent at $77.12 per barrel

Brent North Sea crude: UP 0.8 percent at $83.67 per barrel

New York - Dow: UP 0.4 percent at 33,826.69 (close)

London - FTSE 100: DOWN 0.1 percent at 8,004.36 (close)

P.Thomas--SFF