Asian stocks mixed ahead of Fed rate hike decision

Asian stocks mixed ahead of Fed rate hike decision

Asian stocks mixed ahead of Fed rate hike decision

Asian stock markets were mixed ahead of the Federal Reserve’s announcement of the scale of interest rate hikes to calm U.S. inflation.

Shanghai and Hong Kong have advanced. Tokyo and Sydney refused. Oil prices rose slightly.

Wall Street’s benchmark S&P 500 lost 0.4% on Tuesday as traders waited for a Fed rate hike they expect to reach three-quarters of a percentage point, triple the margin usual. They fear aggressive action by the Fed to quell inflation, which is at its highest level in four decades, could tip the world’s largest economy into recession.

A “hawkish surprise” from the Fed could be an “additional shock to risk assets,” ActivTrades’ Anderson Alves said in a report. “Money markets already price around 90% of the possibility of such action.”

The Shanghai Composite Index gained 1.1% to 3,323.64 after the Chinese government announced factory output rebounded into positive territory in May amid virus checks that shuttered businesses in Shanghai and other industrial centers that have slackened.

Hong Kong’s Hang Seng gained 1.2% to 21,312.67 while Tokyo’s Nikkei 225 lost 0.7% to 26,435.01.

The Kospi in Seoul fell 1.2% to 2,463.45 after the government announced South Korea’s unemployment rate rose 0.1% to 2.8% in May.

Sydney’s S&P-ASX 200 fell 0.4% to 6,658.40. New Zealand and Singapore advanced while Jakarta fell.

On Wall Street, the S&P 500 fell to 3,735.48, putting it 21.8% below its Jan. 3 peak. This puts it in a bear market, down 20% from the market’s last peak.

The Dow Jones Industrial Average fell 0.5% to 30,364.83, and the Nasdaq composite rose 0.2% to 10,828.35.

Also Read: China’s factory activity rebounds as anti-virus curbs ease

Expectations of an unusually large Fed rate hike rose after government data on Friday showed consumer inflation accelerating in May instead of slowing as hoped.

The Fed is scrambling to rein in prices after being criticized for reacting slowly to inflationary pressures.

The British central bank has also raised rates, and the European Central Bank has announced that it will do so next month.

Japan’s central bank kept rates at historic lows. That sent the yen tumbling to its lowest level in two decades, around 135 to the dollar, as traders shifted capital in search of higher yields.

Markets were also rocked by Russia’s attack on Ukraine, which pushed oil prices to all-time highs above $120 a barrel, and virus outbreaks in China that shut down oil prices. Factories and disrupted supply chains.

In energy markets, benchmark U.S. crude rose 13 cents to $119.06 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2 on Tuesday at $118.93. Brent crude, the price basis for international oil trade, added 14 cents to $121.31 a barrel in London. It fell from $1.10 the previous session to $121.17.

The dollar fell to 135.13 yen from 135.30 yen on Tuesday. The euro gained $1.0446 from $1.0411.

Asian stocks mixed ahead of Fed rate hike decision