Adulteration in Asian stocks ahead of Fed’s decision to hike rates

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by Joy McDonald

BEIJING (AP) – Asian stock markets were mixed on Wednesday ahead of the US Federal Reserve’s announcement of a sharp hike in interest rates to calm US inflation.

Shanghai and Hong Kong have made progress. Tokyo and Sydney declined. Oil prices rose.

Wall Street’s benchmark S&P 500 index fell 0.4% on Tuesday as traders wait for a rate hike from the Fed, which they expect will be three-quarters of a percentage point, or three times the normal range. He worries that the Fed’s aggressive moves to calm inflation from a four-decade high could plunge the world’s largest economy into recession.

A “false surprise” from the Fed could be “another blow to riskier assets,” ActiveTrades’ Anderson Alves said in a report. “Money markets are already pricing in around a 90% chance of such an action.”

The Shanghai Composite Index rose 1.1% to 3,323.64 after the Chinese government reported that factory production returned to positive territory in May as anti-virus controls that shut down companies in Shanghai and other industrial hubs were eased .

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

Seoul’s kospi fell 1.2% to 2,463.45 after the government cut South Korea’s unemployment rate to 2.8% from 0.1% in May.

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

On Wall Street, the S&P 500 fell to 3,735.48, down 21.8% from its Jan. 3 peak. This puts it in a bear market, or a 20% drop from the top of the previous market.

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

After government data on Friday raised hopes of an unusually large rate hike by the Fed, consumer inflation accelerated in May rather than slowing as expected.

The Fed has struggled to bring prices under control after previously being criticized for being slow to respond to inflationary pressures.

The UK’s central bank has also hiked interest rates and the European Central Bank says it will do so next month.

The Bank of Japan has kept interest rates near record lows. This has caused the yen to fall to a two-decade low near $135 as traders move capital in search of higher yields.

Markets have also been hit by Russia’s attack on Ukraine, which has pushed oil prices to all-time highs above $120 a barrel, and the virus outbreak in China has caused plant closures and supply chain disruptions. happened.

In energy markets, the reference price for US crude rose 13 cents to $119.06 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2 on Tuesday to $118.93. Brent crude, the price basis for international oil trading, rose 14 cents to $121.31 a barrel in London. In the previous session, it fell $1.10 to $121.17.

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

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