Stock markets were mixed Monday as investors contemplated the possibility the Federal Reserve will hike interest rates again and keep them at three-decade highs with officials struggling to contain inflation.
Equities have come under pressure in recent weeks on bets that the US central bank will need to stick with its tightening bias well into next year as prices remain well above target, while the economy and labour market remain in rude health.
Comments from monetary policymakers will be pored over in the coming days, with traders hoping for some insight into their thinking as speculation grows that borrowing costs will be lifted again before the end of the year.
Last week, Boston Fed chief Susan Collins warned another increase "is certainly not off the table", while Governor Michelle Bowman suggested more would likely be needed.
The prospect of higher rates -- and fewer cuts than hoped next year -- dented sentiment on trading floors, and dragged all three main US indexes into the red Friday.
A recent spike in oil prices to 10-month highs above $90 a barrel is adding to the headache for central bankers, with observers warning the commodity could push above $100 owing to an output cut by Saudi Arabia and Russia.
And Asia struggled Monday, with Hong Kong off 1.8 per cent while Shanghai, Seoul and Bangkok were also lower.
Tokyo, Sydney, Singapore, Taipei, Mumbai and Manila ticked higher. Wellington was flat.
London and Paris were barely moved, though Frankfurt inched higher.
"Sentiment still remains fragile with higher-for-longer messages reverberating through the markets," said Redmond Wong at Saxo Capital Markets.
He added that buying could also be subdued by the possibility of a US government shutdown and the ongoing strike by the United Auto Workers.
There was little initial reaction to news that the United States and China had set up two working groups on economic and financial policy as they look to stabilise relations.
The Economic Working Group will discuss macroeconomic issues, while the Financial Working Group will focus on regulatory and financial stability issues, a senior US Treasury Department official said.
In Hong Kong, worries about China's property sector returned as struggling developer China Evergrande tumbled about 25 per cent after it called off a creditor meeting and said it had scrapped a planned restructuring.
