Asian stocks mixed as some markets close for holidays

What’s happened in the markets?

Asian equities had a mixed session on Monday, with markets in New Zealand, Australia and Hong Kong closed for the Easter holiday. Japan's benchmark Nikkei 225 index gained 0.4%, while South Korea's Kospi rose 0.3%. In mainland China, shares fluctuated around the flatline. The Shanghai Composite Index was last down 0.1%, while the blue-chip CSI300 index was up 0.1%.

The consumer confidence index in Japan rose to 33.9 in March of 2023, up from 31.1 in the previous month and surpassing market forecasts of 31.9. This is the highest reading since May 2022, indicating that households' sentiment has strengthened across all indices as the country continues to recover from pandemic disruptions.

What to watch?

The US dollar index held near its strongest levels in a week on Monday, supported by last week's non-farm payrolls report, which indicated a tight labor market and raised expectations of another interest rate hike from the Federal Reserve in May. The report showed that non-farm payrolls increased by 236,000 jobs in March, close to expectations of 239,000, while the unemployment rate fell to 3.5%, lower than the forecast of 3.6%. Markets are now pricing in a 66% chance that the Fed will raise rates by 25 basis points next month. Investors are eagerly anticipating key US inflation data, which is due to be released on Wednesday, for further clues on the central bank's tightening campaign.

European Central Bank governing council member Klaas Knot expressed doubts on Friday over the need for another half-percentage point rate hike in May, suggesting that a smaller quarter-point increase could be possible. Knot's comments came amid concerns over the economic outlook for the US, with a slew of data released last week, including jobless claims, ISM PMIs, ADP and the JOLTS report, showing that tighter financial conditions are already impacting the economy.