TOKYO –
Asian shares rose on Wednesday as investors awaited the US Federal Reserve’s widely anticipated decision on interest rate policy.
Japan’s benchmark Nikkei 225 index rose 1.7 percent in morning trade to 25,784.71. Australia’s S&P/ASX 200 rose 0.9% to 7,160.00. South Korea’s Kospi rose 0.8 percent to 2,641.23. Hong Kong’s Hang Seng rose 2.1% to 18,807.58. while the Shanghai Composite fell 0.4% to 3,050.59.
At its policy meeting late Wednesday, the Fed is expected to raise its key short-term interest rate by 0.25 percentage points. That would be the first gain since 2018, pulling it off a record low near zero and potentially the start of a series of rallies.
The Fed is trying to slow the economy enough to reduce the high inflation that is sweeping the country while avoiding triggering a recession.
Inflation has been at a multi-generation high, and the most recent numbers do not include the increase in oil prices after Russia invaded Ukraine. The move comes as central banks around the world prepare to inject support into the global economy in the wake of the pandemic.
“The rearrangement of the seats on the Titanic” is by no means a hint of despair, said Tan Boon Heng of Mizuho Bank in Singapore.
On Wall Street, the S&P 500 rose 2.1% to 4,262.45, ending a three-day losing streak after a report showing a rapid rise in inflation paused at wholesale levels last month. The Dow Jones Industrial Average rose 1.8% to 33,544.34 and the Nasdaq rose 2.9% to 12,948.62. The Russell 2000 index of smaller companies rose 1.4% to 1,968.97.
Renewed COVID-19 worries in some regions plus a long list of other concerns have caused intense hour-by-hour volatility in the markets in recent weeks. The war in Ukraine has pushed the prices of oil, wheat and other commodities the region produces far higher. That raises the threat that already high inflation will persist and combine with a potentially stagnant economy.
Investors are also watching the negotiations between Russia and Ukraine. Ukraine’s presidential aide Ihor Zhovkva said video discussions held by representatives of the two countries on Tuesday were “more constructive”, noting that Russia had stopped broadcasting demands for Ukraine to surrender.
Sam Stovall, chief investment officer, said: “If there is any such optimism, at least there is optimism about Ukraine, combined with optimism about inflation, oil in particular, and optimism that The Fed will not be more hawkish than what has been built in the market. Strategist at CFRA.
U.S. data released on Tuesday showed inflation remained very high at wholesale levels last month, but at least it wasn’t accelerating. Manufacturers’ prices in February were 10% higher than a year earlier, similar to those in January. On a month-on-month basis, inflation rose 0.8 percent in February from January, compared with a forecast of 0.9 percent. That was a slowdown from January’s 1.2% month-on-month increase.
U.S. crude oil prices fell earlier on Tuesday but then stabilized. It rose 79 cents to $97.23 a barrel in electronic trading on the New York Mercantile Exchange.
A barrel of US crude fell 6.4% to $96.44 on Monday. It briefly hit $130 last week as worries about supply disruptions because of the war in Ukraine peaked.
Brent crude, the international pricing benchmark, added $1.10 to $101.01 per barrel.
Overnight, the drop in fuel prices helped many stocks rally. Airlines took the lead after several raised their revenue forecasts for the quarter. American Airlines, Delta Air Lines and United Airlines all increased by 8% or more.
Elsewhere, nickel trading will resume on Wednesday on the London Metal Exchange, just over a week after it was suspended when the metal’s price spiked to more than $100,000 a tonne.
Russia is the world’s number 3 nickel producer. Its prices and those of many other commodities have risen on speculation about possible supply disruptions as Russia faces an extension of economic sanctions following its invasion of Ukraine.
In currency trading, the US dollar inched up to 118.25 Japanese yen from 118.31 yen. The euro is priced at $1.0969, up from $1.0955.
___
AP Business Writers Stan Choe and Alex Veiga contributed.
