Asian stocks mixed after Wall Street fell on inflation fears

BEIJING (AP) – Asian stock markets were mixed on Thursday after signs of prolonged upward pressure on US prices contributed to expectations of higher interest rates.

Shanghai and Seoul advanced while Tokyo and Hong Kong declined. oil prices have risen.

Wall Street fell on Wednesday after a survey showed that prices paid by US manufacturers rose for the first time in five months in February, despite rate hikes to cool economic activity and rising inflation.

That prompted traders to raise expectations of how much the Federal Reserve could hike and cut interest rates if cuts were to begin.

“Inflation expectations are rising again,” Invesco’s Brian Levitt said in a report. “The Fed break may not come until the middle of the year at the earliest.”

Elsewhere, inflation in Germany, Europe’s largest economy, remained steady at 8.7% yoy in February.

Despite rate hikes by the European Central Bank, there is “very little to no sign of a disinflationary process outside of energy and commodity prices,” ING’s Carsten Brzeski said in a report.

The Shanghai Composite Index was up 0.2% to 3,318.25, while Tokyo’s Nikkei 225 was down less than 0.1% to 27,506.79. Hong Kong’s Hang Seng fell 0.4% to 20,536.53.

Seoul’s Kospi rose 0.9% to 2,435.43 and Sydney’s S&P ASX 200 was down less than 0.1% to 7,248.70.

India’s Sensex opened up 0.6% to 59,034.74. New Zealand, Bangkok and Jakarta won while Singapore withdrew.

On Wall Street, the benchmark S&P 500 lost 0.5% to 3,951.39. The Dow Jones Industrial Average rose less than 0.1% to 32,661.84. The Nasdaq fell 0.7% to 11,379.48.

An industry group, the Institute for Supply Management, reported an index of prices paid by manufacturers up 51.3 from January’s 44.5 on a 100-point scale where numbers over 50 indicate an increase.

Some traders were hoping that the Fed would ease rate hikes as activity slowed and potentially start cutting rates by the end of this year. But those hopes have been dampened by signs that inflation is staying high and warnings from Fed Chair Jerome Powell and other officials that interest rates will remain elevated for an extended period until price pressures ease.

The Fed raised interest rates from near zero to 4.5% to 4.75% in early 2022 to bring inflation down to 2%.

Following the latest inflation data, traders are expecting the Fed to hike interest rates to at least 5.25% by June. Some expect 5.5%, the highest level in 22 years.

The Fed’s latest hike was 0.25 percentage point, half the more aggressive level of previous hikes, but a Fed board member has publicly suggested a return to a 0.5-point hike.

Some retailers have already issued discouraging forecasts due to inflation and other pressures on consumer spending.

Lowe’s fell 5.6% for one of the biggest losses in the S&P 500 after reporting weaker-than-expected earnings for the most recent quarter.

Vaccine company Novavax plunged 25.9% after warning that there were “significant doubts” about its ability to stay in business next year. A net loss of $657.9 million was reported for the last year.

In the bond market, the US 10-year Treasury yield, or the difference between the market price and the payout at maturity, rose to 3.99% from 3.93% late Tuesday. It’s near its highest level in three months after topping 4% earlier in the day.

The two-year yield, which is more in line with expectations for the Fed, widened to 4.89% from 4.82%.

In energy markets, the US crude benchmark rose 8 cents to $77.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 64 cents on Wednesday to $77.69. Brent crude, the price basis for international oil trading, gained 12 cents in London to $84.43 a barrel. In the previous session, it was up 86 cents to $84.31 a barrel.

The dollar rose to 136.42 yen from 136.17 yen on Wednesday. The euro fell from $1.0658 to $1.0648.

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