By Gina Lee
Investing.com – Asia Pacific stocks were mostly down on Monday morning, holding steady as efforts to bring an end to the conflict in Ukraine continue.
China’s Shanghai Composite was up 0.31% by 10:53 PM ET (2:53 AM GMT) and the Shenzhen Component rose 0.96%. The People’s Bank of China stuck to expectations, keeping the one-year loan prime rate at 3.70% and the five-year LPR at 4.60%.
Hong Kong’s Hang Seng Index inched down 0.05%.
South Korea’s KOSPI was down 0.27%. In Australia, the ASX 200 edged down 0.15%, with the country banning alumina exports to Russia.
Japanese markets are closed for a holiday.
In the U.S., S&P 500 and Nasdaq 100 contracts retreated. This, alongside the moves in Asia Pacific, indicated that global equities were taking a breather from their best weekly performance in about 16 months.
The question for this week is whether they will maintain the rebound and slight dip in volatility from the previous week. China’s vow to support its markets and economy is also providing a small boost.
The conflict triggered by Russia’s invasion of Ukraine on Feb. 24 is entering its fifth week. Although Turkey said Russia and Ukraine are moving closer towards talks for a cease-fire, Russia issued an ultimatum for the surrender of the Ukrainian city of Mariupol.
It also continued to have an impact on the bond market, alongside the U.S. Federal Reserve’s recent monetary policy tightening. The Treasury yield curve is flattening, with portions inverted, a potential warning of an economic slowdown. There is no cash trading in Asia due to the Japanese holiday.
While markets are deriving hope from the peace talks, “the truth is a bit more complex because, unfortunately, we have major devastation going on,” Mizuho Bank Ltd. head of economics and strategy Vishnu Varathan told Bloomberg. “Uncertainty remains elevated,” he added.
Fed Chairman Jerome Powell will speak later in the day, alongside Atlanta Fed President Raphael Bostic. This comes less than a week after the Fed raised interest rates as it handed down its latest policy decision.
However, “our concern is that the Fed is tightening into an economic slowdown as it prioritizes high inflation,” Manulife Investment Management head of macro strategy for Asia Sue Trinh told Bloomberg.
“We think it will balance that trade-off of slower growth, higher inflation by lagging the market pricing in terms of the pace, the magnitude, and the duration of this tightening cycle,” she added.
European Central Bank President Christine Lagarde will speak at the BIS Innovation Summit 2022 on Tuesday, with Bank of England Governor Andrew Bailey and Powell following a day later.
U.K. Chancellor of the Exchequer Rishi Sunak will also deliver his “spring statement” on the budget on Wednesday and U.S. President Joe Biden will attend a NATO emergency summit in Brussels on Thursday.