Shares were mixed in Asia on Wednesday after stocks rallied on Wall Street following comments by the chair of the Federal Reserve signaling that last week’s stunningly strong jobs report won’t by itself sway its stance on interest rates hikes.
Hong Kong, Sydney and Seoul rose while Tokyo and Shanghai declined. U.S. futures edged lower while oil prices were little changed.
The benchmark S&P 500 climbed 1.3% following a shaky day where stocks pinballed between losses and gains as Fed Chair Jerome Powell gave his first public comments since raising rates last week. Other indexes also gained.
Investors are caught between hopes that the Fed will ease back on rate hikes because inflation is cooling and worries that strong employment data augur a potential rebound in price pressures, Stephen Innes of SPI Asset Management said in a commentary.
“For the next little while, the central banks aren’t as important as the economic data will be," Innes said. “With markets operating in a macro vacuum today, investors aren’t exactly scrambling to put on risk."
Tokyo shares were weighed down by losses in electronics and tech-related companies like Nintendo and Sharp Corp. that have reported weaker earnings than expected.
SoftBank fell 5.1% after reporting its net profit sank $5.9 billion in the last quarter. Nintendo sank 7.5% following its latest earnings update, which showed a slight decline in profit in April-December from the year before. Sharp's shares dived 12.6%.
The Nikkei 225 index lost 0.3% to 27,606.46. The Shanghai Composite index shed 0.5% to 3,232.11. Hong Kong's Hang Seng was flat at 21,297.43. In Australia, the S&P/ASX 200 gained 0.4% to 7,530.10.
South Korea's Kospi advanced 1.3% to 3,396.58. Shares slipped in Bangkok and rose in Taiwan and Singapore.
Tuesday on Wall Street, the S&P 500 rose to 4,164.00 and the Dow gained 0.8% to 34,156.69. The Nasdaq jumped 1.9% to 12,113.79.
High inflation and how high the Fed will take interest rates to combat it have been at the center of Wall Street's gyrations in the last year. Powell said on Tuesday that progress is being made on inflation, though a long battle remains.
That echoed similar comments he made last week, after the Fed approved its smallest increase to interest rates since March, before a jolting jobs report on Friday showed U.S. employers added a third of a million more jobs than expected last month.
That raised concerns about upward pressure on inflation and worries the Fed may keep rates higher for longer, as it’s been warning. Higher rates can drive down inflation but also hurt the economy and investment prices.
Powell said Tuesday at the Economic Club of Washington, D.C., that the market’s big moves since the jobs report have gotten it closer to in sync with the Fed’s thinking. Not only did stocks fall, Wall Street raised its forecast for how high the Fed will take rates by the summer.
“We have a significant road ahead to get inflation down to 2%,” which is the Fed’s target, Powell said. “There’s been an expectation that it will go away quickly and painlessly. I don’t think that’s at all guaranteed.”
Despite all the market's recent moves, the S&P 500 is up 8.5% this year. Much of that was due to easing worries the economy may fall into a severe recession, a scenario described in markets as a “hard landing.”
In other trading Wednesday, U.S. benchmark crude oil rose 11 cents to $77.25 per barrel in electronic trading on the New York Mercantile Exchange. It gained $3.03 to $77.14 per barrel on Tuesday.
Brent crude, the pricing benchmark for international trading, added 1 cent to $83.70 per barrel.
The U.S. dollar fell to 130.95 Japanese yen from 131.11 yen. The euro rose to $1.0745 from $1.0726.
