Asian stock markets gain ahead of Fed update

By JOE McDONALD
AP Business Writer

BEIJING (AP) — Asian stock markets rose Wednesday ahead of the release of minutes from a Federal Reserve meeting that investors hope might show the U.S. central bank is moderating its plans for more interest rate hikes to cool inflation.

Shanghai, Hong Kong, Seoul and Sydney advanced. Tokyo retreated. Oil prices were little-changed.

Wall Street fell Tuesday in the year’s first trading day after recording its biggest annual decline in 14 years in 2022.

Traders worry the Fed and other central banks might be willing to push the world into recession to extinguish inflation that is at multi-decade highs. They hope minutes due out Wednesday from the Fed’s December meeting might show policymakers are reducing or delaying planned rate hikes due to signs economic activity is slowing.

“While the Fed expects to keep rates higher for longer, markets continue to push back, betting on easier policy,” Rubeela Farooqi and John Silvia of High-Frequency Economics said in a report. However, they said, “we do not think a pivot to rate cuts is likely this year.”

The Shanghai Composite Index gained 0.4% to 3,128.38 while the Nikkei 225 in Tokyo sank 1.4% to 25,724.66. The Hang Seng in Hong Kong rose 2.2% to 20,581.92.

The Kospi in Seoul advanced 1.2% to 2,244.47 and Sydney’s S&P-ASX 200 was 1.4% higher at 7,043.90. New Zealand and Singapore advanced while Jakarta declined.

On Wall Street, the benchmark S&P 500 index lost 0.4% to 3,824.14.

The S&P 500 shed a 1% gain and finished 0.4% lower. The Dow Jones Industrial Average slipped less than 0.1% to 33,136.37. The Nasdaq composite dropped 0.8% to 10,386.98.

Technology stocks were among the biggest weights on the market. Apple fell 3.7%, leaving its market value below $2 trillion for the first time since March 8, 2021. Shares in the iPhone maker fell nearly 27% in 2022, their first annual decline in four years.

On top of concerns about inflation, investors worry about the impact of Russia’s war against Ukraine and China’s COVID-19 outbreaks.

The Fed’s key lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year.

The U.S. central bank forecasts that it will reach a range of 5% to 5.25% by the end of 2023. It isn’t calling for a rate cut before 2024.

The U.S. government is due to release December employment figures Thursday. Those are expected to show a decline in hiring. Investors hope that will encourage the Fed to lower or delay possible rate hikes.

The central bank’s next policy decision on interest rates is set for Feb. 1.

Investors also are looking for corporate profit reports in mid-January. Analysts polled by FactSet expect earnings for companies in the S&P 500 to slip during the fourth quarter and remain flat for the first half of 2023.

In energy markets, benchmark U.S. crude shed 5 cents to $76.88 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.33 to $76.93 on Tuesday. Brent crude, the price basis for international oil trading, gained 15 cents to $82.25 per barrel in London. It lost $3.81 the previous session to $82.10.

The dollar edged up to 130.80 yen from Tuesday’s 131.03 yen. The euro advanced to $1.0570 from $1.0547.