Asian shares were trading mixed on Wednesday as investors grappled with the possibility of high U.S. interest rates persisting for a longer period. The news came after Federal Reserve Chairman Jerome Powell indicated that the central bank is in no rush to cut its main interest rate, which is currently at its highest level since 2001.
In Japan, the benchmark Nikkei 225 dipped 0.5%, while Australia’s S&P/ASX 200 edged up slightly. South Korea’s Kospi was little changed, Hong Kong’s Hang Seng slipped, and the Shanghai Composite gained.
Powell’s comments have dampened risk appetite, with market analysts like Yeap Jun Rong from IG noting that investors are being cautious due to the Fed’s stance on rate cuts. This sentiment was reflected in Wall Street, where the S&P 500 and Nasdaq fell, while the Dow Jones Industrial Average rose.
The majority of stocks fell as Treasury yields rose following Powell’s remarks, with traders adjusting their expectations for Fed rate cuts. The two-year Treasury yield shot up immediately after Powell spoke, but later pared its gains.
Companies are now under pressure to deliver strong profits and revenue, as interest rates are unlikely to provide much support to stock prices in the near future. Meanwhile, Donald Trump’s social-media company saw its stock slump further, following a decline on Monday.
In energy trading, benchmark U.S. crude and Brent crude both fell, while in currency trading, the U.S. dollar inched down against the Japanese yen and the euro.
Overall, the mixed trading in Asian shares reflects the uncertainty surrounding U.S. interest rates and their impact on global markets. Investors will be closely watching future Fed decisions and economic data for further clues on the direction of monetary policy.
