BEIJING (AP) — Asian stock markets were mixed Wednesday ahead of the Federal Reserve’s announcement on how strongly it will raise interest rates to cool U.S. inflation.
Shanghai and Hong Kong advanced. Tokyo and Sydney declined. Oil prices rose slightly.
Wall Street’s benchmark S&P 500 lost 0.4% on Tuesday as traders awaited a Fed rate hike they expect to be three-quarters of a percentage point, or triple the usual margin. They worry that the Fed’s aggressive action to cool inflation, which is at a four-decade high, could push the world’s largest economy into recession.
A “fake surprise” from the Fed could be “another shock to risk assets,” ActivTrades’ Anderson Alves said in a report. “The money markets are already pricing in about a 90% chance of this action.”
The Shanghai Composite gained 1.1% to 3,323.64 after the Chinese government reported that factory output rebounded into positive territory in May as virus controls that shut down companies in Shanghai and other industrial centers.
Hong Kong’s Hang Seng gained 1.2% to 21,312.67 while Tokyo’s Nikkei 225 fell 0.7% to 26,435.01.
Seoul’s Kospi fell 1.2 percent to 2,463.45 after the government reported that South Korea’s unemployment rate rose 0.1 percent to 2.8 percent in May.
Sydney’s S&P-ASX 200 was down 0.4% at 6,658.40. New Zealand and Singapore moved up while Jakarta went down.
On Wall Street, the S&P 500 fell to 3,735.48, down 21.8% from its Jan. 3 peak. This puts it in a bear market, or a 20% drop from the last market high.
The Dow Jones Industrial Average fell 0.5% to 30,364.83 and the Nasdaq Composite rose 0.2% to 10,828.35.
Expectations for an unusually large rate hike from the Fed rose after government data on Friday showed consumer inflation accelerated in May instead of easing as expected.
The Fed is struggling to control prices after earlier being criticized for being slow to react to inflationary pressures.
Britain’s central bank has also raised rates and the European Central Bank says it will do so next month.
Japan’s central bank has kept rates near historic lows. That has sent the yen to a two-decade low of around 135 to the dollar as traders shift capital in search of higher yields.
Markets have also been rocked by Russia’s attack on Ukraine, which has pushed oil prices to record highs above $120 a barrel, and virus outbreaks in China that have caused factory shutdowns and disrupt supply chains.
In energy markets, benchmark U.S. crude rose 13 cents to $119.06 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2 on Tuesday to $118.93. Brent crude, the benchmark for the international oil trade, added 14 cents to $121.31 a barrel in London. It fell $1.10 in the previous session to $121.17.
The dollar fell to 135.13 yen from 135.30 yen on Tuesday. The euro rose to $1.0446 from $1.0411.