Asian shares traded mixed on Wednesday as concerns arose about the possibility of U.S. interest rates remaining high for an extended period. Japan's Nikkei 225 declined by 0.5% to 38,296.69, while Australia's S&P/ASX 200 saw a slight increase to 7,618.50. South Korea's Kospi remained relatively unchanged, and Hong Kong's Hang Seng slipped by 0.2% to 16,219.84. In contrast, the Shanghai Composite gained 1.1% to 3,040.72.
The market reaction followed remarks by Federal Reserve Chairman Jerome Powell, who indicated that the central bank is cautious about reducing its main interest rate, currently at its highest level since 2001. Powell emphasized the need for more confidence in inflation trending towards the 2% target before considering rate cuts.
On Wall Street, the S&P 500 dropped by 0.2% to 5,051.41, while the Dow Jones Industrial Average rose by 0.2% to 37,798.97. The Nasdaq composite fell slightly to 15,865.25. The majority of stocks declined as Treasury yields rose, reflecting diminishing expectations of significant rate cuts by the Fed this year.
Traders are now anticipating only one or two rate cuts in 2024, compared to initial expectations of six or more. Powell's comments led to a spike in the two-year Treasury yield, which later settled at 4.98%. The uncertainty surrounding interest rates has put pressure on companies to deliver strong financial results to support stock prices.
In other news, Donald Trump's social-media company experienced a further decline in its stock value. Trump Media & Technology Group fell by 14.2% after announcing plans to introduce a live TV streaming service on its Truth Social app. Energy trading saw benchmark U.S. crude dropping to $84.54 a barrel, while Brent crude fell to $89.57 a barrel.
Currency trading showed a slight decrease in the U.S. dollar against the Japanese yen and a marginal increase in the euro. Overall, market sentiment remains cautious amid uncertainties surrounding interest rates and inflation.
