BEIJING (AP) — Asian stocks were mixed on Friday after a Federal Reserve official suggested U.S. interest rates may need to be raised higher than expected to calm inflation.
Shanghai and Hong Kong gained while Tokyo fell. Oil prices have won.
Wall Street’s benchmark S&P 500 index fell 0.3% on Thursday after a Fed official indicated that the US central bank may have to raise its key rate to nearly double its already high level to curb price increases. Officials previously warned that rates may need to be kept high for an extended period, but traders were hoping that signs of slowing economic activity might cause the Fed to back off on those plans.
Traders fear that unusually large rate hikes this year by the Fed and central banks in Europe and Asia to stem inflation that has been at multi-decade highs could tip the global economy into recession.
“Fed hawks continued to circle the wagons, repeatedly stressing that their fight against inflation is far from over,” said Stephen Innes of SPI Asset Management.
The Shanghai Composite Index gained 0.2% to 3,121.42 while the Nikkei 225 in Tokyo lost 0.1% to 27,893.24. The Hang Seng in Hong Kong added 0.7% to 18,179.14.
Seoul’s Kospi rose 0.1% to 2,445.76 and Sydney’s S&P-ASX 200 added 0.2% to 7,151.80.
The India Sensex opened 0.4% lower at 61,503.62. New Zealand, Jakarta and Bangkok gained while Singapore fell.
On Wall Street, the S&P 500 fell to 3,946.56. The Dow Jones Industrial Average slipped less than 0.1% to 33,546.32. The Nasdaq composite closed down 0.3% at 11,144.96.
The major indices are all heading for weekly losses.
Traders expect the Fed to raise its key rate again at its December meeting, but by half a percentage point after four consecutive increases of 0.75 percentage points, three times its usual margin .
The President of the Federal Reserve Bank of St. Louis reaffirmed the Fed’s position in a presentation Thursday. James Bullard has suggested that the Fed’s short-term key rate may need to rise between 5% and 7%.
That would require steeper hikes in the Fed’s benchmark rate, which sits between 3.75% and 4% from near zero in March.
Bullard’s presentation follows reports that inflation is starting to ease but remains hot as consumers continue to spend in a very dynamic job market.
“The latest round of speeches from the Fed reminded us that policymakers can remain very hawkish,” Oanda’s Edward Moya said in a report. “The Fed may need to continue to increase beyond February.”
Investors are also worried about the impact of Russia’s war on Ukraine – which has driven up the prices of oil, wheat and other commodities – and the tightening of virus controls in China.
China’s “zero-COVID” approach has caused a shortage of supply for some of Asia’s largest manufacturers, which has hurt economic growth.
In energy markets, benchmark U.S. crude rose 75 cents to $82.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell from $3.95 on Thursday to $81.64. Brent crude, the price basis for international oil trade, gained 59 cents to $90.37 a barrel in London. It lost $3.08 the previous session to $89.78.
The dollar fell to 139.98 yen from 140.25 yen on Thursday. The Euro rose slightly to $1.0368 from $1.0364.