BANGKOK– Asian shares were mostly lower on Monday as the Bank of Japan began a two-day meeting that is being watched for indications of a change to the central bank's long-standing near-zero interest rate policy.
US futures and oil prices rose.
Investors have been speculating for months that rising prices would prompt the Japanese central bank to finally abandon its excessively lax monetary policy. But the meeting that ends Tuesday is not expected to lead to any major change.
Tokyo's Nikkei 225 index lost 0.8% to 32,708.35, while the US dollar rose higher against the Japanese yen, from 142.11 to 142.20.
The BOJ has kept its benchmark interest rate at minus 0.1% for a decade, hoping to encourage investment and lending to fuel continued strong growth. One goal is to bring inflation to a target of 2%. But while inflation has risen, wages have failed to keep pace and central bank government Kazuo Ueda has remained cautious about making big moves at a time of deep uncertainty about the prospects for the global economy.
Chinese shares fell due to the renewed sale of real estate shares.
Hong Kong's Hang Seng lost 0.9% to 16,633.98 and the Shanghai Composite index fell 0.1% to 2,938.79.
Debt-strapped developer Country Garden lost 2.4%, while China Evergrande fell 1.3%. Sino-Ocean Group Holding lost 2.2%.
Elsewhere in Asia, the Australian S&The P/ASX 200 fell 0.3% to 7,420.30. South Korea's Kospi rose 0.2% to 2,569.40 and Bangkok's SET fell 0.2%.
On Friday the S&The P500 ended less than 0.1% lower at 4,719.19. But the stock still remains within 1.6% of its all-time high early last year, completing a seventh consecutive winning week for the longest streak in six years.
The Dow Jones Industrial Average, which tracks a smaller part of the U.S. stock market, rose 0.2% to 37,305.16, setting a record for the third day in a row. The Nasdaq index climbed 0.4% to 14,813.92.
“If the S&P nears record levels, market participants appear undeterred. The prevailing sentiment appears to be that there is no compelling reason to blunt this rally until concrete evidence emerges pointing to significant economic headwinds or inflation,” Stephen Innes of API Asset Management said in a commentary.
Stocks rose overall last week after the Federal Reserve appeared to give a nod to hopes that it is done raising rates and will start cutting them in the new year. Lower rates not only boost prices for all kinds of investments, they also ease pressure on the economy and the financial system.
The Fed's goal has been to slow the economy and lower investment prices enough through high interest rates to control inflation. Then he must release the brakes at exactly the right time. If it waits too long, the economy could enter a painful recession. If inflation comes too early, inflation could accelerate again and cause misery for everyone.
Inflation peaked at 9.1% in June 2022, the most painful inflation Americans had experienced since 1981.
A preliminary report on Friday indicated that U.S. business activity growth could be higher. It cited “looser financial conditions,” which is another way of describing market moves that could encourage companies and people to spend more.
The Congressional Budget Office said Friday it expects inflation to approach the Federal Reserve's 2% target in 2024 as overall growth slows. Unemployment is expected to rise in 2025, according to updated economic projections for the next two years.
In other trading, U.S. benchmark crude rose 34 cents to $71.77 a barrel in electronic trading on the New York Mercantile Exchange early Monday. On Friday, the price fell 15 cents to $71.43.
Brent crude, the international standard, rose 31 cents to $76.86 a barrel.
The euro rose from $1.0897 to $1.0912.