Asian stocks mixed as inflation augurs Fed rate hikes

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BANGKOK (AP) – Shares in Asia fell mostly on Thursday after the Federal Reserve was on track to raise interest rates in the coming months following the latest reports of price hikes in the US.

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Tokyo, Shanghai and Seoul were lower while Hong Kong and Sydney advanced. US futures declined in line with the S&P 500 SPX contract,
+0.28%
down 0.2% and for the Dow DJIA,
+0.11%
0.1% less.

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Rising coronavirus cases in Asia have raised uncertainty about the pace of recovery from the pandemic.

Despite high vaccination rates and strict border policies, the Omicron coronavirus variant has spread throughout Australia and other countries in the region. Japan on Wednesday reported more than 13,000 new infections, the highest level in four months. China, whose zero-COVID policies are being challenged by the outbreak weeks ahead of the Beijing Winter Games, is testing and in some cases locking down entire cities.

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Tokyo’s Nikkei 225 Index NIK,
-0.82%
fell 0.9% to 28,499.08, while the Shanghai Composite SCOMP,
-0.31%
dropped 0.3% to 3,586.29. In Seoul, Kospi 180721,
-0.22%
It closed at 2,962.99, down 0.3%.

Hang Seng Hsi,
+0.08%
Hong Kong rose 0.1% to 24,432.51 and the S&P/ASX 200 XJO,
+0.37%
rose 0.3% to 7,459.50.

Yield on 10 Year Treasury TMUBMUSD10Y,
1.746%
was steady at 1.74%.

In addition to the direct impact of large coronavirus outbreaks on normal business activity, the impact on manufacturing and shipping could hinder a rebound from the disruptions of the past two years.

“So far, the market reaction to the Omicron wave has been moderate, but it is worth noting concerns about further impacts on global supply chains that could trigger risk-off trading,” said Anderson Alves of ActiveTrades in a report. can do.”

The S&P 500 rose 0.3% to 4,726.35 on Wednesday. The Dow Jones Industrial Average gained 0.1% to close at 36,290.32. Nasdaq Comp,
+0.23%
The composite rose 0.2% to 15,188.39. All in motion for weekly gains.

Shares of the smaller company declined. Russell 2000 RUT,
-0.82%
The index fell 0.8% to 2,176.06.

Investors were focused on a report from the Labor Department that showed consumer prices were up 7% last month. This is the fastest year-on-year movement in the Consumer Price Index in nearly four decades. The sharp increase, which was in line with economists’ forecasts, came a day after Fed Chair Jerome Powell told Congress the central bank was ready to raise rates to fight inflation.

Modest gains were led by technology stocks, retailers and other companies that rely on direct consumer spending.

Shares of the smaller company declined. The Russell 2000 Index fell 17.95 points, or 0.8%, to 2,176.06.

Wall Street is watching rising inflation closely over the impact on businesses and consumers, as well as the Fed’s plan to reduce its support for the economy and markets.

The central bank is reducing bond purchases which helped keep interest rates low throughout the virus pandemic.

The market is now likely to raise the Fed’s short-term rates by at least a quarter point in March to about 75%. It was around 36 per cent a month ago.

Wall Street will get another update on rising inflation on Thursday, when the Labor Department releases December results from an index based on US wholesale prices. It shows how inflation is affecting costs for businesses.

Businesses in many industries are passing higher costs to consumers, but are warning that they will still feel the financial impact due to higher prices and supply chain problems.

Wall Street will be watching the latest round of earnings close to see how companies are tackling inflation.

Delta Air Lines DAL,
-1.50%
Reports its results on Thursday. Citigroup C,
+0.25%,
JPMorgan Chase JPM,
+0.57%
and Wells Fargo WFC,
+0.61%
Result report on Friday.

In other trade, US benchmark crude oil fell 16 cents to $82.48 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, it rose $1.42 to $82.64 a barrel.

Brent crude, the base for international oil pricing, fell 17 cents to $84.50 a barrel.

The US dollar slipped to 114.57 Japanese yen on USDJPY,
-0.06%
From 114.64 yen. EUR EURUSD,

was unchanged at $1.1444.

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