New Delhi (Agency): Asian stocks exhibited mixed behavior on Monday as traders are eagerly looking forward to the Federal Reserve’s summer conference. The event is seen as crucial for insights on whether the U.S. central bank believes inflation is under control or if further interest rate hikes are required to suppress inflation.
Shanghai and Hong Kong’s stocks retreated, while Tokyo and Seoul made advancements. Additionally, oil prices saw an increase.
Wall Street’s benchmark S&P 500 index slightly declined by 0.1% on Friday, ending the week lower in anticipation of the Jackson Hole, Wyoming, conference. This event is significant because Fed officials have previously used it to signal changes in policy direction. Tan Boon Heng of Mizuho Bank mentioned in a report that there “may be rude hawkish surprises” and that Chair Jerome Powell “may allude to structurally higher (and potentially more volatile) inflation being the new norm.”
The markets showed varied reactions: Shanghai Composite Index fell 0.3% to 3,122.67; Tokyo’s Nikkei 225 advanced 0.6% to 31,626.56; Hong Kong’s Hang Seng dropped 1.1% to 17,760.29. Seoul’s Kospi gained 0.6%, while Sydney’s S&P-ASX 200 shed 0.2%. New Zealand, Singapore, and Bangkok also showed fluctuations.
On Wall Street, the Dow Jones Industrial Average slightly increased, but the Nasdaq composite slipped 0.2%. Tech and other high-growth stocks, which are viewed as potential losers due to higher rates, have seen declines of more than 10% from this year’s highs.
The S&P 500, which soared in the first seven months of 2023, has given back more than a quarter of those gains after criticism that the market was too hasty in believing that inflation was controlled.
Recent data showing strong U.S. consumer spending and hiring has fueled expectations that the Fed might feel compelled to maintain a higher benchmark lending rate for a longer period.
Inflation has declined from its peak of over 9% last year but remains above the Fed’s 2% target. Economists are expressing that bringing inflation down to the Fed’s target might be the most challenging part.
On Friday, Ross Stores saw a 5% gain for the largest increase in the S&P 500, while Estee Lauder fell 3.3%, despite reporting stronger-than-expected profit and revenue.
In energy markets, U.S. crude and Brent crude both advanced, while slight changes were seen in the value of the dollar and euro.
Overall, the mixed response in Asian stocks, paired with the anticipation surrounding the Federal Reserve’s conference, indicates that the global market is closely watching the U.S. central bank’s approach towards inflation control and interest rates, highlighting the interconnectedness and sensitivity of international financial systems.
