Article content
HONG KONG (AP) — Asian markets reeled in Thursday trading after U.S. stocks posted a mixed end and the Federal Reserve delayed interest rate cuts.
US futures rose sharply and oil prices rose.
Article content
The Nikkei 225 index in Tokyo fell 0.1% to 38,236.07.
The Japanese yen rose as much as 2% in early Asian hours on Thursday, boosted by speculation about another round of yen-buying interventions by Japanese authorities and a weaker U.S. dollar after the Fed meeting. The yen later reversed course, erasing previous gains. The dollar traded at 155.31 yen, up from 154.91 yen.
Advertising 2
Article content
“As expected, the Japanese Ministry of Finance, through the Bank of Japan, again sold US dollars to stabilize the yen. “In fact, the Japanese government is dipping into its sizeable $1.2 trillion war chest and trying to take a profit on the dollar it bought back in 2000,” said Stephen Innes, managing partner at SPI Asset Management, in a commentary . He said the hope was to stabilize the yen at around 155-157 against the dollar.
In South Korea, the Kospi fell 0.2% to 2,686.30 after official data showed the country’s consumer prices reached 2.9% year-on-year in April, a slower pace than March data.
Hong Kong’s Hang Seng index rose 2.4% to 18,190.32. Other markets in China remained closed for the Labor Day holiday.
Australia’s S&P/ASX 200 rose 0.2% to 7,587.00.
On Wednesday, the S&P 500 fell 0.3% to 5,018.39 after the Fed kept its key interest rate at its highest level since 2001, as markets expected. The index had gained as much as 1.2% in the afternoon before giving back all of its gains at the end of trading.
The Dow Jones Industrial Average rose 0.2% to 37,903.29 and the Nasdaq Composite lost 0.3% to 15,605.48.
Top stories
Article content
Advertising 3
Article content
On the negative side of financial markets, Federal Reserve Chairman Jerome Powell was vocal about the fear that has recently driven down stock prices and dashed traders’ hopes of imminent interest rate cuts: “In recent months, inflation has shown that there is a lack of further progress toward our interest rate 2% target.” He also said it would likely take “longer than previously expected” before people are confident enough to cut interest rates, a move that would reduce pressure on the economy and investment prices.
At the same time, however, Powell allayed market fears that inflation has remained so high that further interest rate hikes may be necessary.
“I think it’s unlikely that the next rate hike will be an increase,” he said.
The Fed also offered some support to financial markets by announcing that it would slow the reduction of its holdings of Treasury bonds. Such a move could rev up the wheels of trade in the financial system and provide stability in the bond market.
Traders themselves had already cut their expectations for rate cuts this year to one or two, if any, after forecasting six or more at the start of the year. That’s because they saw the same series of reports as the Fed indicating that inflation remained stubbornly higher than forecast this year.
Advertising 4
Article content
Powell had already indicated that interest rates could remain high for a while. That was a disappointment for Wall Street after the Fed previously indicated it planned to cut interest rates three times during 2024.
The U.S. manufacturing sector contracted unexpectedly last month, according to a report from the Institute for Supply Management. A separate report found that U.S. employers posted slightly fewer jobs at the end of March than economists had expected.
There is hope on Wall Street that a slowdown could help prevent upward pressure on inflation. The disadvantage is that if the slowdown is too severe, an important support for the economy could be lost.
In energy trading, U.S. crude oil prices ended a three-day decline, rising 50 cents to $79.50 a barrel. Brent crude, the international standard, rose 59 cents to $84.03 a barrel.
In foreign exchange trading, the euro cost $1.0718, up from $1.0709.
Article content