Offshore Markets Update with Thando Tsiane

Asian stocks and Wall Street futures struggled on Monday as U.S. debt ceiling negotiations approached crunch time after stalling last week, while lingering banking fears and fresh geopolitical worries also capped sentiment.

U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, less than two weeks before the June 1 deadline after which Treasury expects the federal government will struggle to pay its debts.

A failure to lift the debt ceiling would trigger a default, likely sparking chaos in financial markets and a spike in interest rates.

The Nikkei 225 index is trading 0.1% higher at 30,833.94. The Hang Seng index has gained 1.3% to trade at 19,694.28, while the Kospi index is trading 0.9% higher at 2,560.18.

S&P 500 futures lost 0.1% while Nasdaq futures were flat.

MSCI's broadest index of Asia-Pacific shares outside Japan was wobbly and was last up 0.1% for the day. Japan's Nikkei, which on Friday hit its highest since August 1990, was also mostly unchanged while Australia's resources-heavy shares slipped 0.3%.

On Friday, reports that debt ceiling negotiations had reached an impasse rattled markets even as Federal Reserve Chairman Jerome Powell said U.S. interest rates might not need to rise as much given the tighter credit conditions from the banking crisis.

The Fed chief also flagged that after a year of aggressive rate increases, officials can afford to make "careful assessments" of the impact of rate hikes on the economic outlook, a stance that was viewed as dovish by markets.

That has knocked the dollar off a two-month top against a basket of major peers and was last at 103.05 on Monday, flat for the day.

Meanwhile, regional U.S. bank shares continued to fall on Friday, as Treasury Secretary Janet Yellen reportedly warned that more mergers may be necessary after a series of bank failures.

Later in the week, the Fed will release minutes of the May meeting on Wednesday while U.S. personal consumption expenditures (PCE) inflation data is due out on Friday.

Oil prices reversed earlier gains. U.S. crude futures were down 0.7% to $71.03 per barrel, while Brent crude futures fell 0.6% to $75.12 per barrel.

Gold prices were largely unchanged at $1,976.89 per ounce.