Asian shares mixed after Fed hints rate hikes may end soon
TOKYO, March 23, (AP): Asian shares were mixed Thursday after the Federal Reserve raised a key interest rate, while noting the end may be near for its economy-crunching hikes to interest rates.
The Fed raised its key overnight rate by a quarter of a percentage point, the same size as its last increase, in its campaign to drive down inflation. That effort has been complicated by turmoil in the banking sector, with investors worried that more banks might fail after Silicon Valley Bank’s recent collapse.
Japan’s benchmark Nikkei 225 shed 0.2% to 27,419.61. Australia’s S&P/ ASX 200 slipped 0.7% to 6,968.60. South Korea’s Kospi gained 0.3% to 2,424.48. Hong Kong’s Hang Seng gained 1.7% to 19,923.04, while the Shanghai Composite rose 0.5% to 3,282.11. Shares rose in India and Taiwan.
“A risk-off tone following the recent Fed meeting has set the stage for the Asian region to follow through with some losses,” Yeap Jun Rong, a market analyst at IG, said in a commentary.
Europe
France’s CAC 40 declined 0.3% in early trading to 7,112.95, while Germany’s DAX slipped 0.2% to 15,183.25. Britain’s FTSE 100 dipped 0.5% to 7,532.54. U.S. shares were set to drift higher with Dow futures up 0.5% to 32,430.00. S&P 500 futures added 0.7% to 3,999.75.
US
US Stocks fell sharply Wednesday after the Federal Reserve indicated the end may be near for its economycrunching hikes to interest rates, but it also doesn’t expect to cut rates anytime soon despite Wall Street’s hopes.
The S&P 500 fell 1.6% for its first drop in three days. The Dow Jones Industrial Average lost 530 points, or 1.6%, while the Nasdaq composite dropped 1.6%.
Some of the sharpest drops came again from the banking industry, where investors are worried about the possibility of more banks failing if customers pull out their money all at once. They slid after Treasury Secretary Janet
Yellen said she’s not considering blanket protection for all depositors at all banks, unless they present a risk to the overall system.
Stocks had been little changed for much of the day, before the Fed raised its key rate by a quarter of a percentage point in its campaign to drive down inflation. The move was exactly what Wall Street was expecting. The bigger question was where the Fed is heading next. There, the Fed gave a hint it may not hike rates much more as it assesses the fallout from the banking industry’s crisis.
Instead of repeating its statement that “ongoing increases will be appropriate,” the Fed said Wednesday that it now only sees “some additional policy firming may be appropriate.” Chair Jerome Powell emphasized the shift to ”may” from “will.”
The Fed also released the latest set of projections from its policy makers on where rates are heading in upcoming years. The median forecast had the federal funds rate sitting at 5.1% at the end of this year, up only a smidge from where it currently sits, in a range of 4.75% to 5%.
That’s also the same level as seen in December, and it’s counter to worries in the market that it could rise given
how stubborn high inflation has remained.
That helped to send yields slumping in the bond market, which has been home to some of the wildest action this month. The yield on the two-year Treasury, which tends to track expectations for the Fed, tumbled to 3.96% from 4.13% just before the projections were released. It was above 5% earlier this month.
Some of this month’s slide also came from building hopes for rate cuts later this year by the Fed. Such cuts can boost prices for stocks, bonds and other investments while giving the economy more room to breathe. They also, though, can give inflation more fuel.
Oil
In energy trading, benchmark U.S. crude fell 40 cents to $70.50 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard lost 33 cents to $76.36 a barrel.
Currencies
In currency trading, the U.S. dollar fell to 131.12 Japanese yen from 131.39 yen. The euro cost $1.0902, up from $1.0857.