Asian stocks rise after Wall St slides on rate hike fears

BEIJING (AP) Asian stock markets rose Thursday after Wall Street’s biggest one-day drop in two months, after notes from a Federal Reserve meeting showed officials expect to keep US interest rates high to fight stubborn inflation.

Shanghai, Hong Kong and Seoul advanced. Japanese markets were closed for a holiday. Oil prices won.

Wall Street sank Wednesday after notes from the latest Federal Reserve board meeting showed members expect continued increases in key lending rates to slow the economy. That dampened hopes that the cuts would start as early as this year.

The need for higher for longer rates was made clear,” Mizuho Bank’s Vishnu Varathan said in a report.

The Shanghai Composite Index gained less than 0.1% to 3,293.37 and Hong Kong’s Hang Seng rose 0.5% to 20,534.79.

The Kospi in Seoul rose 1.1% to 2,445.21 while the S&P-ASX 200 in Sydney lost 0.4% to 7,285.70.

The Indian Sensex opened 0.2% at 59,871.58. New Zealand and Jakarta advanced, while Singapore and Bangkok declined.

Global stock prices have fallen on concerns that inflation is not cooling down as quickly or smoothly as traders had hoped.

Traders are concerned that the Fed and other central banks may be willing to push the world into recession to quench inflation that has remained near multi-decade highs despite sharp rate hikes over the past year.

Traders have begun to drop bets that the Fed would cut rates by the end of this year. They expect at least two more increases by the Fed of 0.25 percentage points. Some think the U.S. central bank will again use unusually large increases of double that margin.

The Fed’s key lending rate stands at 4.50% to 4.75%, up from nearly zero a year ago. It has said it does not expect any cuts this year.

The minutes of the Fed showed that some officials at the last meeting favored raising the benchmark rate by 0.5 points, double the margin the bank had decided on.

That followed resilient data on hiring, retail sales and inflation, which showed that economic activity is still strong.

On Wall Street, the benchmark S&P 500 index lost 0.2% to 3,991.05. The S&P’s earnings have shrunk so far this year from a peak of 8.9% to 3.9%.

The Dow Jones Industrial Average fell 0.3% to 33,045.09. The Nasdaq rose 0.1 percent to 11,507.07 points.

Trades see a 3 in 4 chance that the Fed will raise rates by 0.25 points at its next meeting in March, CME Group said. They see a 27% chance of a 0.50 point increase.

A month ago, traders saw about a one in five chance that the Fed would not raise rates at all in March.

In the energy markets, benchmark US crude gained 34 cents to $74.29 a barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled $2.41 to $73.95 on Wednesday. Brent oil, the price base for international oil trade, rose 33 cents to $80.78 a barrel in London. It dropped $2.45 the previous session to $80.60.

The dollar fell from 134.99 yen on Wednesday to 134.77 yen. The euro fell from $1.0650 to $1.0624.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.