(AP) — TOKYO — Most Asian markets were down on Monday, when trading was slow because of a U.S. holiday.
Even though Wall Street had a good day on Friday, worries about inflation and the risk of a global recession from the central bank’s efforts to control it seemed to outweigh the good news.
After rising to $20,742, the price of the most popular cryptocurrency in the world, BTCUSD, -2.72 percent, fell back below the psychological threshold of $20,000. The cryptocurrency news site CoinDesk said that Bitcoin fell nearly 10% over the weekend, to less than $18,600.
As late afternoon came to a close in Tokyo, the price was $20,048.
Most of the big Asian stock markets went down, but China’s market went up a little bit. This was because China kept its 1-year and 5-year loan prime rates the same, which most people expected.
Given how hard it is for China to control outbreaks and how bad its economy is, “rate cuts in the coming months are still likely because we expect the economy to recover slowly under the COVID-zero policy.” Iris Pang, chief economist for Greater China at ING, said in a commentary that the government should give out more fiscal stimulus after this rate pause.
The Nikkei 225, which is Japan’s main stock market index, fell 0.7% to 25,771. The S&P/ASX 200 XJO, -0.64 percent in Australia fell 0.6% to 6,433.
South Korea’s stock market index (Kospi 180721, -2.04%) fell by 2.1%, to 2,389.69. The Hang Seng HSI, +0.30 percent in Hong Kong went up by less than 0.1 percent to 21,111, and the Shanghai Composite SHCOMP, -0.04 percent barely moved, going up by less than 0.1 percent to 3,317.69.
China and Japan, two of the world’s three largest economies, are not raising interest rates.
Last week, Japan’s central bank didn’t change its policy of keeping interest rates close to zero. However, comments from the governor of the Bank of Japan, Haruhiko Kuroda, were closely watched for clues about what Tokyo might do about the weakening yen.
A weaker currency can help Japanese exporters like Toyota Motor Corp. TM, -0.33 percent make more money, but it can also mean that the economy is in trouble.
Kuroda was worried about the low yen and what it meant for Japanese businesses, but he said he didn’t have any plans to change monetary policy right away. That means the gap between interest rates and investment returns in Japan and the U.S. will keep getting bigger, and the dollar will keep getting stronger.
“The U.S. dollar has no choice but to go up a lot as long as the emperor is in charge. Once the emperor’s clothes are found to be lacking, the dollar will go down. In a commentary, Clifford Bennett, chief economist at ACY Securities, said, “This could be one of the best opportunities for wild market swings in the history of any market.”
On Monday, the U.S. dollar was worth 134.92 Japanese yen USDJPY, -0.19% This was down from 134.96 yen the day before. The price of the euro EURUSD, +0.17% went up from $1.0498 to $1.0526.
On Monday, the U.S. markets are closed because of the Juneteenth holiday. But Federal Reserve Chair Jerome Powell won’t talk about monetary policy until later this week. He will talk to the Senate Banking Committee and the House Financial Services Panel.
Wall Street ended a hard, confusing week with a slight gain. The S&P 500 SPX, +0.22% went up by 0.2% to 3,674.84. The Dow Jones Industrial Average dropped 0.13 percent to 29,888.78, while the Nasdaq Composite rose 1.43 percent to 10,798.35.
The Russell 2000 index of smaller stocks, RUT, +0.96%, went up by 1%, to 1,665.69.
The move by the Federal Reserve has caused the markets to get ready for a world with higher interest rates. Higher interest rates can bring inflation down, but they can also cause the economy to slow down and push down the prices of stocks, bonds, cryptocurrencies, and other investments. This could lead to a recession.
Last week, the Fed raised its most important short-term interest rate by three times what it usually does. This was the biggest increase since 1994. At its next meeting in July, it might think about a mega-hike like this again. A report on the U.S. economy from last week also showed that industrial production was lower than expected last month.
The yield on a 10-year Treasury bond, which was 3.30 percent late Thursday, went back down to 3.23 percent on Friday.
In the energy market, the price of benchmark U.S. crude CL.1, +0.26% rose 36 cents to $109.35 per barrel. Brent crude, which is the international standard, went up by 63 cents to $113.74 a barrel.