However, a bright start to the week came after Xi Jinping was handed a third term as leader due to declines in Hong Kong and Shanghai and put in place a team that supports his financially damaging zero-Covid strategy.
The yen fluctuated against the dollar as speculation intensified that Japanese officials were again stepping into foreign exchange markets to support their currency for the second time in as many sessions.
Tokyo, Sydney, Seoul and Taipei gained gains after a strong performance in New York sparked by a report that the Fed may begin to take its foot off the pedal in its rate hike campaign.
The Wall Street Journal article said some officials were keen to discuss the slowdown at next month’s meeting.
Steps taken by the Fed and other central banks to fight decades of high inflation have led to a market slump this year.
Officials were expected to raise rates by 75 basis points for the fourth time in a row next month, while bets were rising on another such move in December.
“The Fed’s suggestion of a 50 basis point incremental rate hike from 75 basis points in December produced a fierce rally in US equities, a partial reversal of the recent surge in US Treasury yields and a smart turn-turn in the US dollar,” National Australia The bank’s Ray Attrill said.
However, while most equity markets across the region were doing well, the Chinese markets were being hammered by the reshuffle at the top of the government. Hong Kong fell more than four per cent and Shanghai nearly one per cent.
Xi, who was given a third five-year term as leader over the weekend, handed over key positions to loyalists who backed his strategy to fight the Covid outbreak with lockdowns and other tough measures.
Policy has been blamed for a sharp drop in growth in the world’s number two economy, and data on Monday showed traders remained on edge as the third quarter expanded more than forecast.
On currency markets, the yen was hovering around $149, having previously strengthened to 145.65, amid concerns that officials had intervened to support the unit for the second time in as many sessions.
Officials stepped in on Friday after the dollar hit a 32-year high of 151.93 yen, observers said. This comes after warnings from the finance ministry that it is monitoring movements, and follows a similar move last month.
“While the (Ministry of Finance) declined to comment on whether they intervened, this kind of action would not have happened without several warnings from the authorities,” said Matt Simpson at City Index.
“MOF said last week that they would take a ‘serious’ deal with speculators and the strong price reaction on Friday suggests they did the same.
“Price action in Monday’s Asian session has also been uncertain, pointing to another possible intervention.”
The pound rose after Liz Truss resigned last week after former UK Prime Minister Boris Johnson said he would not stand for the Conservative leadership again.
His decision makes his former finance minister Rishi Sunak the favorite to take over the reins and become the country’s third prime minister this year.
The choice of a less-controversial craze may provide little stability at Westminster, after weeks of turmoil from a debt-fueled mini-budget truce, which affected the pound and sent shudders through the markets.
TOKYO – Nikkei 225: UP 1.0 percent at 27,156.95 (break)
Hong Kong – Hang Seng Index: down 4.4 percent to 15,497.13
Shanghai – overall: down 0.9 percent to 3,010.37 . Feather
Pound/Dollar: UP at $1.1318 from $1.1258 on Friday
Dollar/yen: UP from 147.65 yen to 148.92 yen
EUR/dollar: down from $0.9863 to $0.9840
Euro/Pound: Down from 87.26 pence to 86.93 pence
West Texas Intermediate: flat at $85.05 a barrel
Brent North Sea crude: FLAT $93.47 per barrel
New York – Dow: UP 2.5 percent (closer) at 31,082.56
LONDON – FTSE 100: UP 0.4 percent, at 6,969.73 (close)
dan/cwl
This story has been published without modification in text from a wire agency feed.
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