Asian markets swing as traders assess rates outlook

HONG KONG, China — Asian markets were mixed Thursday as investors tried to gauge the outlook for US interest rates, while also keeping tabs on developments in France as it heads for crucial elections.

With Wall Street closed, there were few catalysts to drive buying, though sentiment has been buoyed this week by recent data indicating the world's top economy is slowing gradually, giving the Federal Reserve some freedom to ease monetary policy.

Traders are closely following the utterances of US central bank officials on their outlook for rates, with most warning that while inflation was on a downward trajectory, they wanted to see more evidence before committing to a cut.

Analysts say this means there will be two reductions at most, with many predicting just one this year -- in line with the Fed's "dot plot" gauge released last week.

While there is a level of uncertainty over rates, equity markets have enjoyed plenty of support, with dealers optimistic that borrowing costs will come down eventually as prices are brought under control, the economy eases and the jobs market loosens.

However, there is some concern that the rally, which has been largely driven by a voracious appetite for tech and all things related to artificial intelligence, could see a correction at some point.

Chris Weston at Pepperstone Group in Melbourne said there is some talk about what could cause this, warning that "all is not so rosy under the hood, where index market breadth has been poor, with participation underwhelming, suggesting the rally has been built on a shaky foundation".

"It has simply been a tough trade to bet against AI in its various guises -- so until we lose these behemoths then pullbacks at an index level will likely be shallow and well-supported."

Shares in Tokyo, Seoul, Wellington, Taipei, Mumbai and Jakarta edged up but Hong Kong, Shanghai, Sydney, Bangkok, Manila and Singapore were in the red.

London and Frankfurt rose in the morning.

Paris was also up as traders eyed developments in France ahead of polls at the end of the month, with President Emmanuel Macron's centrist alliance in third place behind far-right and left parties.

There are fears for the French economy