TOKYO — Asian shares fell Wednesday as worries about inflation set off expectations the U.S. Federal Reserve might raise interest rates.
Japan’s Nikkei 225
NIK,
dropped 1.6% in early trading, following a national holiday Tuesday. South Korea’s Kospi
180721,
slipped 0.3%, and Australia’s S&P/ASX 200
XJO,
edged down nearly 0.1%. Hong Kong’s Hang Seng
HSI,
was flat, while the Shanghai Composite
SHCOMP,
fell 0.1%. Stocks dipped in Taiwan
Y9999,
but were little changed in Singapore
STI,
and Indonesia
JAKIDX,
“Markets continue to shift their expectations toward a tighter Fed monetary policy,” said Yeap Jun Rong, a market strategist at IG, adding that investors will be watching for U.S. data being released later in the day.
Some Asian central banks have already begun to raise interest rates to tamp down inflation. New Zealand’s raised its benchmark interest rate by 0.25% Wednesday to 0.75%.
In October the Reserve Bank raised it from a record low 0.25% to 0.5%, the first such hike in more than seven years, removing some support it put in place when the coronavirus pandemic began.
The Fed will release minutes later in the day from its October policy meeting, potentially giving investors more details on the central bank’s plan to start trimming bond purchases that have helped keep interest rates low.
Investors have been watching to see if pressure from rising inflation will goad the Fed into speeding up its plans for trimming bond purchases and raising its benchmark interest rate.
Wall Street closed out a wobbly day of trading, as gains in banks and energy companies tempered losses elsewhere in the market. The S&P 500
SPX,
managed to rise 0.2% to 4,690.70 after wavering between small gains and losses for much of the day.
The Dow Jones Industrial Average
DJIA,
rose 0.5% to 35,813.80, while the Nasdaq composite
COMP,
closed 0.5% lower, at 15,775.14.
The price of U.S. crude oil rose 2.3% and wholesale gasoline rose 3.4% on Tuesday after President Joe Biden ordered 50 million barrels of oil released from the nation’s strategic reserve to help bring down energy costs. The move was made in concert with other big oil-consuming nations, including Japan.
Although Japan’s overall data has not shown an inflation problem on the scale of other nations, critics say it’s just not as blatantly visible, in sectors slammed by soaring energy prices, from businesses that rely on fuel to plastic bags that are a petroleum product.
The release of the oil reserves may not…
Read More: Asian markets decline amid inflation, oil price worries