Stocks were mixed in Asia on Monday after ending the week mostly lower on Wall Street, despite the Nasdaq's first close above 16,000.
A resurgence of coronavirus outbreaks in the U.S., Europe and some other regions is weighing on investor sentiment. Comments by advisers to the Chinese central bank about risks of “stagflation,” meanwhile, have reinforced concerns about inflationary pressures.
The Shanghai Composite index gained 0.6% to 3,582.77 while the Hang Seng in Hong Kong lost 0.6% to 24,888.11.
Tokyo's Nikkei 225 recovered from earlier losses, edging 0.1% higher to 29,774.11. In Australia, the S&P/ASX 500 gave up 0.6% to 7,353.10.
Shares fell in India and Taiwan.
The People's Bank of China as Beijing faces the challenge of curbing risks from excessive borrowing by property developers while still keeping the economy growing at a robust pace.
An adviser to the PBOC, Liu Shijin, told a conference over the weekend that China needed to avoid “quasi-stagflation," Bloomberg reported.
Another economist, Jia Kang, echoed that sentiment, saying that if the pace of economic growth is slower than the inflation rate, “then how can we formulate a prescription for macro-control?"
Ting Lu of Nomura noted that controls on property lending, fresh waves of COVID-19 outbreaks and strict policies to fight them and surging prices are all adding to China's policy challenges.
“A raft of meeting memos and policy reports show that Beijing is becoming increasingly concerned about the growth slump and has begun to take action to shift its policy stance in order to prevent growth from sliding further," Ting said in a report.
On Friday, the S&P 500 index gave up 0.1% to 4,697.96 and the Dow Jones Industrial Average fell 0.8% to 35,601.98.
The Nasdaq added 0.4% to 16,057.44, for its sixth straight gain.
Smaller-company stocks fell more than the broader market. The Russell 2000 index lost 0.9% to 2,343.16.
Despite an up-and-down week, the S&P 500 and Nasdaq notched weekly gains, while the Dow posted its second straight weekly loss.
Some 66% of companies in the S&P 500 fell, with financial and energy stocks accounting for a big share of the pullback. Those losses outweighed gains in technology and a mix of companies that rely on consumer spending.
Energy related shares fell as U.S. crude oil prices dropped 3.7%.
U.S. stocks have been mostly pushing higher since early October as companies reported much stronger profits for the summer than analysts expected, with overall earnings growth of about 40%. That's much better than forecasts for 23% growth made back in June.
Still, companies are facing higher raw materials costs and supply chain problems that could crimp future profits. Consumers have so far absorbed higher prices, but analysts fear they could start economizing if higher prices persist too long.
“Stock markets continue to trade at or near record highs in the U.S., and who can blame them? U.S. data remains strong although the inflation noise gets louder by the day," Jeffrey Halley of Oanda said in a commentary.
The situation is putting pressure on the Federal Reserve to move faster to rein in its ultra-low-rate policies in order to combat rising prices. On Friday, analysts at Bank of America projected that the Fed will likely start raising its benchmark interest rate in the second quarter of 2022, two quarters earlier than they had previously forecast.
Investors are waiting to see if President Joe Biden decides to keep Jerome Powell at the Fed's helm.
Biden is expected to announce within days whom he will choose for the nation’s most powerful economic position. Many Fed watchers expect Powell to be offered a second term, though Lael Brainard, a member of the Fed’s Board of Governors, has emerged as a leading alternative.
In other trading, U.S. benchmark crude oil lost 11 cents to $75.83 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for international pricing, lost 24 cents to $78.65 per barrel.
The U.S. dollar rose to 114.17 Japanese yen from 113.96 yen on Friday. The euro slipped to $1.1274 from $1.1289.