TOKYO (AP) – Asian stocks mostly rose on Friday as investors digested the US Federal Reserve’s latest message about raising short-term interest rates by the end of 2023.
Japan’s benchmark added 0.3% in morning trading to 29,108.23. South Korea’s Kospi rose 0.1% to 3,266.88. The Australian S & P / ASX 200 rose 0.5% to 7,395.00. The Hong Kong Hang Seng jumped 0.7% to 28,750.38, while the Shanghai Composite slipped nearly 0.1% to 3,523.05.
Investors are watching what the Bank of Japan might say about its monetary policy as the central bank ends a two-day policy meeting, although dramatic changes are not expected.
“We expect the BOJ to remain on hold, but continue to emphasize the accommodative bias,” Mizuho Bank’s Venkateswaran Lavanya in Singapore said in a report, saying Japan’s “exit” from extreme monetary easing is expected to lag behind the Fed.
The Fed’s comments came on Wednesday, and global markets had already initially reacted on Thursday. But comments about the possibility of slowing down the central bank’s bond buying program are spilling over into the markets. Such support has been one of the main reasons for the stock market’s resurgence to record highs.
The S&P 500 slipped less than 0.1% to 4,221.86 after falling from a gain of 0.2% to a loss of 0.7%. Most stocks in the Index and Wall Street were down, but gains from Apple, Microsoft and a few other tech heavyweights helped offset the losses.
The Dow Jones Industrial Average fell 0.6% to 33,823.45, while the Nasdaq composite rose 0.9% to 14,161.35, driven by gains in technology and other stocks at high increase.
In the bond market, the yield on the 10-year Treasury bill returned almost all of its surge from the previous day. It fell to 1.51% against 1.57% Wednesday night.
The two-year yield, which tends to move more with Fed stock expectations, was more stable. It went from 0.21% to 0.22%.
The first step the Fed is likely to take would be a slowdown in its $ 120 billion monthly bond purchases, which help keep mortgages low, but the Fed chairman said such reduction is still probably “a long way off”.
Any easing of the Fed’s aid to the economy would be a big change for the markets, which feasted on easy terms after the central bank cut short-term rates to zero and put other programs in place. emergency.
While the economy still needs support, the recovery is proving to be strong enough that it does not need the same emergency measures taken at the start of the pandemic, said Stephanie Link, chief investment strategist and portfolio manager at Hightower.
“We’re going to get a reduction,” she said. “They need it, we don’t need emergency measures right now.”
The economy has started to explode out of its coma as more widespread vaccinations help the world get closer to normal. At the same time, soaring commodity prices are forcing companies across the economy to raise their own prices for customers, from fast food restaurants to used cars.
This is fueling concerns about whether higher inflation will be temporary, as the Fed predicts, or more durable. The reality could be more mixed. The rise in commodity prices is likely related to increased demand as the economy recovers, but the rise in wages is likely to be more sustainable as employers raise wages to attract workers, Link said.
Investors received somewhat disappointing economic news when the Labor Department said the number of Americans who apply for unemployment benefits last week increased slightly. The total of 412,000 workers claiming unemployment benefits was worse than economists expected. If this turns out to be a trend rather than an aberration, it could push the Fed to hold the line longer on supporting the economy.
Stocks of companies whose earnings are most closely tied to a strong economy and interest rates suffered some of the largest losses in the market.
S&P 500 energy stocks fell 3.5% after the price of crude oil fell.
Banks have struggled after falling long-term yields hurt their prospects for profit from loans. Bank of America fell 4.4% and JPMorgan Chase lost 2.9%.
Commodity producers were also weak, with miner Newmont losing 7% after the price of gold fell 4.7%. Gold tends to struggle when the Federal Reserve raises interest rates.
On the winning side were the large, tech-driven companies, which dominated the stock market for years as they continued to grow almost regardless of the strength of the economy. Amazon grew 2.2%, Microsoft 1.4%, and Apple 1.3%.
In energy trading, benchmark US crude fell 38 cents to $ 70.66 a barrel in electronic trading on the New York Mercantile Exchange. It fell from $ 1.11 to $ 71.04 a barrel on Thursday. Brent crude, the international standard, fell 43 cents to $ 72.65 a barrel.
In currency trading, the US dollar fell to 110.20 Japanese yen from 110.23 yen. The euro went from $ 1.1908 to $ 1.1926.
AP Business Writers Damian J. Troise and Stan Choe contributed.
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