Asian shares were trading mixed on Wednesday as expectations resurfaced that U.S. interest rates may stay high for a while, causing investors to react cautiously. Japan’s benchmark Nikkei 225 dipped 0.5%, while Australia’s S&P/ASX 200 edged up slightly. South Korea’s Kospi and Hong Kong’s Hang Seng were relatively unchanged, with the Shanghai Composite gaining 1.1%.
The mixed reaction came after Federal Reserve Chairman Jerome Powell indicated that the central bank is waiting to cut its main interest rate, which is currently at its highest level since 2001. Powell stated that the Fed needs more confidence that inflation is heading sustainably down to its 2% target before considering a rate cut.
Market analyst Yeap Jun Rong noted that the appetite for risk-taking remains weak, with Powell and other Fed speakers calling for patience in easing interest rates. This sentiment was reflected in Wall Street’s performance, with the S&P 500 and Nasdaq falling, while the Dow Jones Industrial Average rose.
The majority of stocks fell as Treasury yields rose following Powell’s comments, as traders adjusted their expectations for Fed rate cuts this year. Powell suggested that if higher inflation persists, the Fed will hold rates steady for as long as needed, but could cut rates if the job market weakens unexpectedly.
In energy trading, benchmark U.S. crude and Brent crude both saw slight declines. In currency trading, the U.S. dollar inched down against the Japanese yen and the euro.
Overall, investors are closely monitoring developments in interest rates and inflation, as well as company earnings reports, as they navigate the current market environment.
