Asian Shares Mixed as U.S. Interest Rates Expected to Remain High

Asian shares were trading mixed on Wednesday as investors grappled with the possibility of high U.S. interest rates for an extended period. In morning trading, Japan’s Nikkei 225 dipped 0.6%, Australia’s S&P/ASX 200 edged up 0.2%, and South Korea’s Kospi declined 0.3%. Meanwhile, Hong Kong’s Hang Seng added 0.2% and the Shanghai Composite gained 0.6%.

The mixed reaction came after Federal Reserve Chairman Jerome Powell indicated that the central bank is in no rush to cut its main interest rate, which is currently at its highest level since 2001. Powell emphasized the need for more confidence that inflation is heading sustainably down to the Fed’s 2% target before considering rate cuts.

On Wall Street, the S&P 500 fell 0.2%, the Dow Jones Industrial Average rose 0.2%, and the Nasdaq composite fell 0.1%. Treasury yields rose following Powell’s comments, with traders adjusting their expectations for multiple rate cuts this year.

Traders are now betting on the Fed delivering just one or two cuts to interest rates in 2024, compared to initial expectations of six or more cuts. Companies are under pressure to report strong profits and revenue as interest rates are unlikely to provide much support to stock prices in the near future.

In energy trading, benchmark U.S. crude fell to $84.89 a barrel, while Brent crude dropped to $89.58 a barrel. The U.S. dollar inched up against the Japanese yen and the euro.

The stock of Donald Trump’s social-media company, Trump Media & Technology Group, continued to decline after a 18.3% slide on Monday. The company announced plans to stream live TV on its Truth Social app, but the stock has dropped significantly in recent weeks.

Overall, the uncertainty surrounding interest rates and inflation continues to impact global markets, with investors closely monitoring the Fed’s next moves.