Stock market today: Asian shares are mixed ahead of a Fed decision on interest rates
BANGKOK– Stocks in Asia were mixed on Wednesday ahead of a Federal Reserve decision on interest rates.
In Japan, higher inflation and falling wages raised questions about how the central bank can navigate away from near-zero interest rates. The Bank of Japan will make a policy decision on Friday. In March, the country raised its benchmark interest rate from minus 0.1% to a range of zero to 0.1%, the first such increase in 17 years.
The government reported that producer prices rose 2.4% in May as the yen’s weakness against the US dollar increases the cost of importing fuel and manufacturing components. At the same time, the latest data show that real wages, adjusted for inflation, fell for the 25th month in a row in April.
The concern is that the Bank of Japan will be discouraged from raising interest rates for fear that higher prices will depress consumer spending, hurting the economy as a whole.
Tokyo’s Nikkei 225 index lost 0.7% to 38,876.71.
Hong Kong’s Hang Seng index fell 1.3% to 17,946.46, while the Shanghai Composite index recovered to gain 0.3% to 3,037.47.
The Australian S&The P/ASX 200 fell 0.5% to 7,715.50. In Bangkok the SET was flat.
Gains in technology stocks pushed prices higher in South Korea, where the Kospi rose 0.8% to 2,728.17, and in Taiwan, where the Taiex rose 1.2%.
Trading on Wall Street was subdued on Tuesday ahead of a major inflation report and the Federal Reserve’s policy decision.
The S&The P500 rose 0.3% to 5,375.32, largely on gains in technology stocks. The Nasdaq technology indicator rose 0.9% to 17,343.55 points. Both indices reached record highs for the second day in a row.
Apple rose 7.3% after emphasizing artificial intelligence technology.
The Dow Jones Industrial Average lagged the market. It fell 120.62 points, or 0.3%, to 38,747.42.
The key events for the market this week occur on Wednesday, when the US releases its latest update on consumer inflation and Federal Reserve announces its latest update on interest rates. The US will also release its latest update on wholesale prices on Thursday.
Wall Street expects the government’s consumer price index to remain unchanged at 3.4% in May. Inflation, as measured by the CPI, has fallen sharply from its 2022 peak of 9.1%, but has seemingly stalled at around 3%. That has complicated the Fed’s goal of returning inflation to its 2% target.
The Fed has kept its key interest rate at the highest level in more than two decades, and Wall Street is currently hoping for one or two cuts to that rate this year. Virtually no one expects the Fed to change its key interest rate during its current meeting, which started on Tuesday. Policymakers will release their latest forecasts on Wednesday on the direction in which they see interest rates and the economy moving.
When Fed officials were released their latest projections in Marchthey indicated that the average member expected roughly three interest rate cuts in 2024. That projection will almost certainly fall this time.
Data on the economy has been mixed lately, and traders are hoping for a slowdown that stops short of a recession and is just the right size.
The economy has remained resilient thanks to the support of a strong labor market and consumer spending. Consumers are becoming increasingly stressed, especially those on lower incomes, and retailers are warning investors of the potential impact on profits and revenues. The US labor market is showing some signs of cooling, which could ease inflation but put more pressure on consumers.
Confirm holdings rose 11% on news that the company’s buy now, pay later will be integrated into Apple Pay.
Paramount Global, the media company that owns the Paramount film studio, CBS and several cable networks, fell 7.8% after reports that talks to merge the company with Skydance Media had collapsed.
In other trading early Wednesday, U.S. benchmark crude rose 58 cents to $78.48 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, rose 47 cents to $82.39 a barrel.
The US dollar rose from 157.14 yen to 157.29 Japanese yen. The euro rose from $1.0740 to $1.0745.