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Asian Stocks Mostly Lower Ahead of Fed Interest Rate Decision

Asian Stocks Mostly Lower Ahead of Fed Interest Rate Decision
Asian Stocks Mostly Lower Ahead of Fed Interest Rate Decision

 


BANGKOK (AP) Stocks were mostly lower Wednesday in Asia ahead of a Federal Reserve decision on interest rates.

In Japan, rising inflation and falling wages have raised questions about how the central bank could move away from near-zero interest rates. The Bank of Japan will issue a policy decision on Friday. In March, it raised its policy rate from minus 0.1% to a range of zero to 0.1%, the first such increase in 17 years.

The government said producer prices rose 2.4% in May as the weak yen against the U.S. dollar increased the costs of imports of fuel and manufacturing components. At the same time, the latest data shows that real wages fell in April for the 25th consecutive month.

The worry is that the Bank of Japan will be forced to raise interest rates, fearing that rising prices could depress consumer spending, which would hurt the economy as a whole.

Tokyo's Nikkei 225 index lost 0.6% to 38,899.44.

Chinese stocks also fell, with the latest inflation data suggesting continued weakness in demand.

Hong Kong's Hang Seng Index fell 1.5 percent to 17,913.10 while the Shanghai Composite Index fell less than 1 point to 3,027.41.

The Australian S&P/ASX 200 fell 0.6% to 7,710.90. In Bangkok, the SET fell slightly by 0.1%.

Gains in tech stocks pushed prices higher in South Korea, where the Kospi rose 0.5% to 2,718.86, and in Taiwan, whose Taiex jumped 1.2%.

Trading was calm on Wall Street on Tuesday, ahead of the release of a key inflation report and the Federal Reserve's policy decision.

The S&P 500 rose 0.3% to 5,375.32, largely on gains in technology stocks. The tech-heavy Nasdaq Composite Index rose 0.9% to 17,343.55. Both indexes set records for the second day in a row.

Apple jumped 7.3% after highlighting its progress in artificial intelligence technology.

The Dow Jones Industrial Average lagged the market. It slipped 120.62 points, or 0.3%, to 38,747.42.

The key events for the market this week will take place on Wednesday, when the United States releases its latest consumer and inflation inflation update. Federal Reserve announces its latest interest rate update. The United States will also release its latest wholesale price update on Thursday.

Wall Street expects the government's consumer price index to remain unchanged at 3.4% in May. Inflation measured by the CPI is down sharply from its peak of 9.1% in 2022, but it appears to be stagnating around 3%. This has complicated the federal government's goal of bringing inflation back to its 2% target rate.

The Fed has kept its main interest rate at its highest level in more than two decades and Wall Street is currently hoping for one or two rate cuts this year. Virtually no one expects the Fed to change its main interest rate at its current meeting, which began Tuesday. Policymakers will release their latest forecasts on Wednesday on the direction they see interest rates and the economy going.

When Fed officials released their last screenings in Marchthey said the typical member expects about three interest rate cuts in 2024. That projection will almost certainly fall this time around.

Economic data has been mixed recently, and traders are hoping for a slowdown that doesn't lead to a recession and is of ideal magnitude.

The economy has remained resilient thanks to support from a strong jobs market and consumer spending. Consumers are increasingly stressed, particularly those on lower incomes, and retailers have warned investors about the potential impact on profits and revenues. The U.S. labor market is showing some signs of slowing, which could dampen inflation but put more pressure on consumers.

Affirm assets soared 11% following the announcement that the company's buy now, pay later will be integrated with Apple Pay.

Paramount Global, the media company that owns the Paramount movie studio, CBS as well as several cable networks, fell 7.8% following reports that negotiations to merge the company with Skydance Media had broken down.

In other trading Wednesday morning, benchmark U.S. crude oil rose 44 cents to $78.34 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, rose 36 cents to $82.28 a barrel.

The US dollar fell from 157.14 Japanese yen to 157.23 Japanese yen. The euro rose from $1.0740 to $1.0738.

___

AP Business Editor Damian J. Troise contributed.

Sources

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