Asian markets mostly lower ahead of US holiday

TOKYO (AP) — Asian markets were mostly lower in cautious trading Monday ahead of a federal holiday in the U.S.

Worries over inflation and risks of a global recession from central bank efforts to bring it under control appeared to outweigh Wall Street’s positive close on Friday.

Shares fell in most major markets but edged higher in China, which in a widely expected move, kept its 1-year and 5-year loan prime rates unchanged.

Given China's struggle to bring outbreaks under control and its already faltering economy, “rate cuts in the coming months are still likely as we expect the economic recovery to be slow under the COVID-zero policy. After this rate pause, the government should hand out more fiscal stimulus,” Iris Pang, chief economist Greater China at ING, said in a commentary.

Japan's benchmark Nikkei 225 slid 1.7% in morning trading to 25,534.68. Australia's S&P/ASX 200 slipped 0.7% to 6,432.00. South Korea's Kospi dropped 2.1% to 2,389.69. Hong Kong's Hang Seng edged up 0.2% to 21,109.16, while the Shanghai Composite was little changed, inching up less than 0.1% to 3,317.69.

Two of the world's three biggest economies, China and Japan, are not engaged in raising interest rates.

Last week, Japan's central bank stuck to its near zero interest rate policy, although comments from Bank of Japan Gov. Haruhiko Kuroda were closed watched for hints about what Tokyo might do about the weakening yen.

A weaker currency can help the earnings of Japan's exporting giants like Toyota Motor Corp., but it can also signal a fragile economy.

Kuroda expressed some concerns about the low yen and its impact on Japanese companies, but said he had no immediate plans to change monetary policy. That means a continued growing gap between interest rates and yields on investment in Japan...