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HONG KONG: Asian investors started the week on a cautious note Monday as they assessed the outlook ahead of an expected series of interest rate hikes by the Federal Reserve, while data showed growth in China's economy slowed at the end of last year.

While the fast-spreading Omicron coronavirus variant continues to cast a shadow across trading floors, the focus is on the US central bank's plans to tighten monetary policy to fight surging inflation.

Fed officials were out in force last week flagging the merits of raising borrowing costs as soon as March, though boss Jerome Powell said they would be careful to ensure they do not knock the recovery in the world's top economy off course.

Still, expectations that the era of cheap cash that has helped power markets to record or multi-year highs has weighed heavily for months, while data showing consumer prices rocketing at a pace not seen in four decades has added to the downbeat mood.

A weak reading on retail sales for December caused by concern about the latest Covid wave and higher prices was compounded by a University of Michigan survey showing consumer sentiment fell sharply in January.

Stock markets mostly retreat as focus firmly on inflation

That saw Wall Street turn in a tepid performance Friday, with disappointing bank earnings also dragging sentiment.

Despite the uncertain start to 2022 for global markets, Eli Lee at Bank of Singapore remained upbeat about the outlook.

"As we head into 2022, we believe that the post-pandemic bull market remains broadly intact," he said in a commentary.

"Historically, bull markets do not end at the beginning of rate hike cycles, and positive trends in global economic growth and earnings continue to be positive fundamental drivers for the market."

Macau casino stocks rise

Asia was mixed in early trade with Tokyo, Shanghai, Sydney, Singapore, Taipei and Manila up but Hong Kong, Seoul, Wellington and Jakarta down.

Mainland Chinese shares were given some support by news that the central bank had cut interest rates for the first time since the height of the pandemic last year as officials look to kickstart stuttering growth.

Data showed Monday that the world's number-two economy expanded 8.1 percent last year -- its best rate in 10 years -- but slowed in the final three months as it was hit by virus lockdowns around the country and weakness in the crucial property sector.

Hong Kong-listed casino stocks rocketed after Macau officials on Friday unveiled regulatory measures for the sector that were not as bad as initially feared.

Under the proposed bill, the number of gaming concessions will remain at six but their term will be halved to 10 years, while the proportion of local ownership in casino firms will be lifted from 10 percent to 15 percent.

The revisions should "remove most investors' key concerns, (for example on) dividends, government oversight, minimum shareholding by a Macau permanent resident, gaming tax, etcetera", Citigroup analysts including George Choi said in a note.

Sands Macau soared almost 15 percent, Wynn Macau and MGM China piled on more than 10 percent each, while Melco was up eight percent.

That followed strong gains in New York, where Las Vegas Sands and Melco rocketed more than 14 percent.

Key figures around 0300 GMT

Tokyo - Nikkei 225: UP 0.7 percent at 28,318.54 (break)

Hong Kong - Hang Seng Index: DOWN 0.7 percent at 24,201.94

Shanghai - Composite: UP 0.3 percent at 3,531.74

Dollar/yen: UP at 114.43 yen from 114.25 yen late Friday

Euro/dollar: DOWN at $1.1415 from $1.1418

Pound/dollar: DOWN at $1.3674 from $1.3680

Euro/pound: UP at 83.48 pence from 83.43 pence

West Texas Intermediate: UP 0.6 percent at $84.30 per barrel

Brent North Sea crude: UP 0.3 percent at $86.30 per barrel

New York - DOW: DOWN 0.6 percent at 35,911.81 (close)

London - FTSE 100: DOWN 0.3 percent at 7,542.95 (close)


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