Asian markets retreat with US rates back in focus

HONG KONG, China — Asian markets were mostly lower Monday as relief over the US Congress passing a last-minute deal to avoid a government shutdown gave way to renewed concerns over interest rates.

With the political distraction out of the way, temporarily at least, investor attention is turning back to the outlook for US rates, with Federal Reserve boss Jerome Powell due to give a speech later Monday and key jobs data out this week.

"Financial markets were bracing for a shutdown, so there's an element of relief, but it's only a temporary lifting of one of the clouds hanging over the markets now," Yung-Yu Ma, chief investment officer at BMO Wealth Management, told Bloomberg. 

"Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks."

US stocks ended Friday mostly lower as a government shutdown appeared likely after hardline Republicans had tanked an earlier plan to keep the lights on.

In Asian trade Monday, Tokyo fell 0.3 percent, giving early gains spurred by a positive Bank of Japan business confidence survey as sentiment reverted to risk-off.

Tokyo jumped 1.4 percent in morning trade after the Tankan survey showed increasing optimism among Japan's largest manufacturers for a second-straight quarter but that rosy glow soon faded as fears over US rates returned to the fore.

Asian market action on the first day of the new quarter was somewhat subdued with Hong Kong, South Korea and India closed for holidays. Markets in mainland China were closed for a week-long holiday.

Among those trading, Singapore, Sydney, Wellington, Kuala Lumpur and Manila were in the red while Taipei, Jakarta and Bangkok saw gains.

In Europe, London edged up at the open while Frankfurt and Paris also advanced.

With a US government shutdown averted, eyes will be back on Powell -- who joins Philadelphia Fed President Patrick Harker on Monday for a round-table discussion with workers and small business owners -- for any hints on rates and with key jobs data out later in the week. The ISM manufacturing data for September is also due out Monday.

"With one of the potholes in Q4 economic growth seemingly filled temporarily,