In The Merchant of Venice, how would Shakespeare's audience have perceived Shylock?

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During William Shakespeare's lifetime, Jewish people were considered to be second class. The Jews had a history of being persecuted and moved from place to place. Often, they were treated badly. They were not so much persecuted in London as in many other places, but they were still perceived with mistrust. Many of the bankers and moneylenders were Jewish, so people felt that they had to deal with the Jews, whether they wanted to or not. Shylock is considered to be a villain in The Merchant of Venice because he practices usury, which means he asked for interest on loans (this used to be considered bad practice). He literally wanted a pound of Antonio's flesh to cover a bad debt. Still, Shakespeare did treat Shylock with some sympathy in the play.

As far as the audience's perception, it would certainly depend on how much contact the audience might have had with the Jewish community and how prejudiced they were. Still, Shylock was not a likable character.

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