Asian shares were mixed Wednesday while Chinese benchmarks surged ahead of a decision by the U.S. Federal Reserve on an interest rate increase to curb inflation.
Oil prices rose more than $1 a barrel and U.S. futures were also higher. Stocks ended lower on Wall Street after an unexpectedly strong report on the job market raised concerns the Fed will keep the pressure on inflation with big rate increases.
Chinese shares extended gains after strong advances a day earlier driven by speculation the government might be preparing to gradually relax stringent COVID-19 restrictions. Since that was not followed by any official confirmation, the enthusiasm could quickly fade.
“The power of social media and retail investors was evident after stories circled on China’s zero COVID policy and if Beijing is preparing to phase it out," Stephen Innes of SPI Asset Management said in a commentary.
“Despite new lockdowns being announced ... a China reopening is the biggest ticket in town, and it’s better to show up early rather than late to the reopening party," he said.
B ullish talk by Chinese regulators who addressed a conference of global financiers in Hong Kong also lifted sentiment.
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, urged those attending the meeting to visit China to understand what is happening in the country and urged them not to “bet against” China and Hong Kong. He was among several senior Chinese officials who, speaking in prerecorded video addresses, downplayed risks to the economy due partly to a slump in the real estate sector.
Hong Kong's Hang Seng jumped 2.6% to 15,859.39, while the Shanghai Composite index added 1.7% to 3,018.78.
Japan’s benchmark Nikkei 225 declined 0.1% to 27,643.18. Australia’s S&P/ASX 200 added 0.1% to 6,986.70. South Korea’s Kospi slipped nearly 0.1% to 2,333.67.
South Korea’s export growth fell in October as demand from China fell. Consumer price inflation rose 5.7% on year in October, in line with the market consensus.
“Sentiments in the Asia session could largely hold on to some wait-and-see as well, but eyes will remain on Chinese equities after their stellar performance yesterday,” Yeap Jun Rong, market strategist at IG in Singapore, said in a report.
The Fed was due to begin a two-day policy meeting Wednesday that’s expected to yield its sixth interest rate increase of the year as the central bank fights the worst inflation in four decades. The widespread expectation is for the Fed to push through another increase that’s triple the usual size, or three-quarters of a percentage point.
The S&P 500 fell 0.4% to 3,856.10 after having been up as much as 1% shortly after trading opened. The Dow Jones Industrial Average fell 0.2% to 32,653.20 and the Nasdaq composite dropped 0.9%, to 10,890.85. The Russell 2000 rose 0.3% to 1,851.39.
Big technology stocks were the biggest weights on the market. Their big valuations give them more heft in pushing the broader market up or down. Also, rising interest rates tend to make the sector look less attractive because of those high valuations. Apple fell 1.8%.
Communication services stocks, retailers and other companies that rely on consumer spending also helped drag down the overall S&P 500, keeping gains in banks, energy firms and other sectors of the market in check.
The Labor Department reported that U.S. job openings rose unexpectedly in September, suggesting the labor market is not cooling as fast as the Fed hoped for as it tries to slow economic growth.
Earnings remain a big focus for investors this week. Starbucks and Warner Bros. Discovery report earnings on Thursday and Cardinal Health does so on Friday.
Outside of earnings, Abiomed surged 49.9% after health care giant Johnson & Johnson said it will pay $16.6 billion for the heart pump maker. Johnson & Johnson slipped 0.5%.
In energy trading, benchmark U.S. crude added $1.32 to $89.69 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose $1.19 to $95.84 a barrel.
In currency trading, the U.S. dollar edged down to 147.35 Japanese yen from 148.23 yen. The euro cost 98.95 cents, up from 98.78 cents.
