TOKYO (AP) – Asian stocks were mixed in calm trading on Wednesday ahead of a US Federal Reserve meeting that could give clues as to what lies ahead with its massive support to markets.
Japan released data showing its trade surplus jumped 49.6% in May from a year earlier, but analysts said it was less than expected and highlight how the world’s third-largest economy and its exports may only slowly recover from the pandemic.
Investors are also monitoring data from China on industrial production and retail sales for clues on the health of the regional economy.
Japan’s Nikkei 225 slipped nearly 0.3% early in trading to 29,359.31. South Korea’s Kospi rose 0.4% to 3,272.11. The Australian S & P / ASX 200 gained 0.3% to 7,403.40. The Hong Kong Hang Seng edged down 0.1% to 28,603.84, while the Shanghai Composite was little changed, advancing less than 0.1% to 3,557.48.
“Asian markets are calm ahead of the Fed,” said Robert Carnell, regional head of Asia-Pacific research at ING. “China’s data dump may shake things up a bit today, but the focus will be on the Fed’s message and any clues it might give.”
On Wall Street, the S&P 500 fell 0.2% to 4,246.59 as the Federal Reserve entered a two-day meeting on interest rates and other policies. A day earlier, the index hit a record high amid optimism about the economy.
The Dow Jones Industrial Average lost 0.3% to 34,299.33. The Nasdaq composite fell 0.7% to 14,072.86.
The S&P 500 was down 0.4% earlier today, after a report showed wholesale inflation jumped last month by even more than economists expected. Prices for producers were 6.6% higher in May than a year earlier, the highest since 2010 and the latest evidence that inflation is skyrocketing across the economy.
The fear is that if higher inflation takes hold, the Fed could pull back the $ 120 billion in monthly bond purchases it has pledged to keep mortgages cheap and interest rates at. long-term low, and could raise short-term interest rates to their all-time low. .
The Fed has so far said it sees higher inflation as temporary. He will announce his last decision on interest rate policy Wednesday afternoon.
“From a pricing perspective, we are seeing inflationary pressure, and we think the jury is still out on when and to what extent we will see a leveling or if this new higher price standard is cemented,” said Greg Bassuk. , founder and CEO of AXS Investments.
Most economists expect the Fed to say again on Wednesday that it considers the rise in inflation to be only temporary, which would allow it to maintain its support for the markets. But they also say that Wednesday afternoon may offer the first sign the Fed is considering when to start slowing its bond buying.
Many investors agree with the Fed’s view that higher inflation will not last very long and that this is the expected outcome of an economy escaping pandemic lockdowns. According to BofA Global Research, a survey of fund managers found that 72% of respondents say inflation is only “transient”. This makes the majority say that any future drop in stock prices would likely be less than 10%.
There are few signs that inflation could slow in parts of the economy. Wood and copper prices have fallen from their highs a few weeks ago. Copper fell 4.3% on Tuesday, and shares in miner Freeport-McMoRan fell 4.8%.
Other reports on the economy on Tuesday painted a mixed picture. Retail sales fell 1.3% in May from April, collapsing after gaining 0.9% the month before, for a much steeper drop than economists expected.
This is likely due in part to the dampening effect of payments the U.S. government sent to households earlier this year, which boosted spending in March and April. But economists said it could also be a sign that Americans are buying less and spending more on travel, dining and other services as the economy reopens.
In energy trading, benchmark US crude gained 62 cents to $ 72.74 a barrel in electronic trading on the New York Mercantile Exchange. It gained $ 1.24 Tuesday to $ 72.12 a barrel. Brent crude, the international standard, added 64 cents to $ 74.63 a barrel.
In currency trading, the US dollar rose from 110.07 yen to 110.09 Japanese yen. The euro cost $ 1.2122, compared to $ 1.2127.
AP Business Writers Damian J. Troise and Stan Choe contributed.
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