BEIJING (AP) – Asian stock markets rose yesterday ahead of the release of minutes from a Federal Reserve (Fed) meeting that investors hope might show the United States (US) central bank is moderating plans for more interest rate hikes to cool inflation.
Shanghai, Hong Kong, Seoul and Sydney advanced.
Tokyo retreated. Oil prices were little-changed.
Wall Street fell on Tuesday in the year’s first trading day after recording its biggest annual decline in 14 years in 2022.
Traders worry the Fed and other central banks might be willing to push the world into recession to extinguish inflation that is at multi-decade highs. They hope minutes from the Fed’s December meeting might show policymakers are reducing or delaying planned rate hikes due to signs economic activity is slowing.
“While the Fed expects to keep rates higher for longer, markets continue to push back, betting on easier policy,” said Rubeela Farooqi and John Silvia of High-Frequency Economics in a report. However, they said, “we do not think a pivot to rate cuts is likely this year”.
The Shanghai Composite Index gained 0.3 per cent to 3,126.51 while the Nikkei 225 in Tokyo sank 1.3 per cent to 25,764.11. The Hang Seng in Hong Kong rose 2.3 per cent to 20,608.21.
The Kospi in Seoul advanced 1.7 per cent to 22,57.15 and Sydney’s S&P-ASX 200 was 1.5 per cent higher at 7,052.30. New Zealand advanced while Southeast Asian markets declined.
On Wall Street, the benchmark S&P 500 index lost 0.4 per cent to 3,824.14.
The S&P 500 shed a one per cent gain and finished 0.4 per cent lower. The Dow Jones Industrial Average slipped less than 0.1 per cent to 33,136.37.
The Nasdaq composite dropped 0.8 per cent to 10,386.98.
Technology stocks were among the biggest weights on the market. Apple fell 3.7 per cent, leaving its market value below USD2 trillion for the first time since March 8, 2021.
Shares in the iPhone maker fell nearly 27 per cent in 2022, their first annual decline in four years.
On top of inflation, investors worry about the impact of the situation in Ukraine and COVID-19 outbreaks.
The Fed’s key lending rate stands at a range of 4.25 per cent to 4.5 per cent, up from close to zero following seven increases last year to cool economic activity and upward pressure on prices.
The US central bank forecasts that it will reach a range of five per cent to 5.25 per cent by the end of 2023. It isn’t calling for a rate cut before 2024.
The US government is due to release December employment figures soon. Those are expected to show a decline in hiring.
Investors hope that will encourage the Fed to lower or delay possible rate hikes.
The central bank’s next policy decision on interest rates is set for February 1.
Investors also are looking for corporate profit reports in mid-January. Analysts polled by FactSet expect earnings for companies in the S&P 500 to slip during the fourth quarter and remain flat for the first half of 2023.
In energy markets, benchmark US crude shed 28 cents to USD76.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell USD3.33 to USD76.93 on Tuesday. Brent crude, the price basis for international oil trading, retreated 17 cents to USD81.93 per barrel in London.
It lost USD3.81 the previous session to USD82.10.
The dollar edged down to JPY130.81 from Tuesday’s JPY131.03. The euro advanced to USD1.0575 from USD1.0547.
