TOKYO (AP) — Asian stocks traded mixed Wednesday as hopes that U.S. interest rates could remain high for some time resurfaced.
Japan’s benchmark Nikkei Stock Average fell 0.5% in afternoon trading to $38,296.69. Australia’s S&P/ASX 200 index rose less than 0.1% to 7,618.50. South Korea’s Kospi remained almost unchanged, declining little by little to 2,608.93. Hong Kong’s Hang Seng Index fell 0.2% to 16,219.84, while the Shanghai Composite Index rose 1.1% to 3,040.72.
Federal Reserve Chairman Jerome Powell said at an event on Tuesday that the central bank first needs more confidence that inflation is sustainably falling toward negative territory, so the central bank remains at its highest level since 2001. Reaction was mixed after the bank said it was waiting to cut key interest rates. The goal is 2%.
IG market analyst Yep Jun Long said, “While Federal Reserve Chairman Jerome Powell is reviewing the timing of rate cuts, many Fed speakers are appealing for patience in easing. “The appetite for risk-taking remains weak.”
On Wall Street, the S&P 500 index fell 10.41 points (0.2%) to 5,051.41. The index deepened its decline from a day earlier, when it fell under pressure from rising U.S. Treasury yields.
The Dow Jones Industrial Average rose $63.86, or 0.2%, to $37,798.97, and the Nasdaq Composite Index fell $19.77, or 0.1%, to $15,865.25.
However, most stocks fell as Treasury yields rose following Powell’s comments. Interest rates have been rising rapidly as traders have given up hope that the Fed will cut rates significantly this year. Rising interest rates reduce the prices of all types of investments and increase the risk of future economic downturns.
Powell cited a series of reports this year that showed inflation remained higher than expected, saying, “Recent numbers clearly don’t give us a lot of confidence, and if anything, we don’t think we’ll achieve that confidence.” This suggests that it is likely to take longer than expected.”
He suggested the Fed would keep interest rates on hold “for as long as necessary” if high inflation persists. But he acknowledged that the Fed could cut interest rates if the job market weakens unexpectedly.
The yield on the two-year Treasury note, a signal of expectations for Fed action, rose to 5% shortly after Powell’s remarks and returned to its previous level in November.
However, as the afternoon progressed, yields tapered their rise, and the two-year bond yield returned to 4.98%. This is still up from 4.91% late Monday.
Traders primarily expect the Fed to cut interest rates only once or twice this year, after expecting at least six rate cuts into 2024. They are now betting on a 12.5% chance of no rate cut, up from just 1.2% a month ago, according to CME Group data.
Companies are under even more pressure than usual to report higher profits and revenues, as interest rates, another measure of stock prices, are unlikely to rise significantly anytime soon.
Shares of Donald Trump’s social media company also fell again. Trump Media & Technology Group fell another 14.2%, following an 18.3% decline from Monday.
The company is rolling out a service on its Truth Social app that streams live TV, including news networks and “other content that has been canceled, is at risk of cancellation, or suppressed on other platforms or services.” He said there was.
The stock was close to $80 last month, but fell below $23 as the excitement faded and the company moved to clear the way for some investors to sell their shares.
In energy trading, benchmark U.S. crude oil fell 52 cents to $84.54 a barrel. Brent crude, the international standard crude, fell 45 cents to $89.57 per barrel.
In currency trading, the US dollar depreciated slightly from 154.65 yen to 154.64 yen. The euro rose to $1.0623 from $1.0617.
