Stock market today: Asia shares mixed after Fed holds rates steady and hints of hikes ahead

Asian shares were trading mixed Thursday after the U.S. Federal Reserve held interest rates steady.

Data from China showed consumer and factory activity weakened in May and record-breaking unemployment among young people in cities rose as an economic rebound following the end of anti-virus controls slowed. Consumers, uneasy about possible job losses, have returned to shops and restaurants less quickly than expected.

In Japan, machinery orders for April, released Thursday, showed the first growth in three months. Trade figures for May showed a deficit for 22 months in a row, as import costs rose with the rising energy and other prices.

Japan's benchmark Nikkei 225 erased morning gains to finish little changed, down less than 0.1% at 33,485.49. Australia's S&P/ASX 200 added 0.2% to 7,175.30. South Korea's Kospi shed 0.4% to 2,608.54. Hong Kong's Hang Seng gained 1.6% to 19,723.65, while the Shanghai Composite edged up nearly 0.7% to 3,250.06.

In standing pat on rates, Fed Chair Jerome Powell said the economy will have more time to absorb past hikes, adding, “ideally by taking a little more time, we won’t go well past the level where we need to go.”

That may give the economy and financial markets breathing room, but there was some skepticism.

“It is too early to say that Powell is winning the fight against inflation," said Ruslan Lienkha, chief of markets at YouHodler, a financial services company.

“The Fed can later decide to continue the rate increase or keep high rates for a significantly long time. Such scenarios are quite possible and might obviously disappoint financial markets in one or a few months.”

Wall Street swung to a mixed finish in anticipation of interest rate hikes later this year, even as it was held steady for the time being.

The S&P 500 finished the day 0.1% higher to 4,372.59 after pinballing between gains and losses following the Fed’s announcement. The Dow Jones Industrial Average dropped 0.7% to 33,979.33, while the Nasdaq composite rose 0.4% to 13,626.48.

The Fed closed its latest policy meeting by saying it would keep rates where they are to give more time to see how its fusillade of hikes over the last 15 months is affecting the economy. It's trying to slow the economy just enough through rate increases to snuff out high inflation without damaging the job market and creating a recession.

The majority of Fed policy makers indicated Wednesday they still expect its main interest rate to climb at least 0.50 percentage points by the end of the year. The federal funds rate is already at its highest level since 2007, in a range between 5% and 5.25%.

Inflation has slowed since last summer's peak, but Powell said there hasn't been enough improvement in underlying trends to feel comfortable.

In anticipation of future increases to rates, yields in the bond market rose following the Fed's announcement. The 10-year yield climbed as high as 3.83% from 3.77% just before the Fed's announcement.

It later receded to 3.79%, compared with 3.82% late Tuesday. That yield helps set rates for mortgages and other important loans.

The two-year Treasury yield, which moves more on expectations for the Fed, climbed to 4.68% from 4.67% late Tuesday and was as high as 4.78%.

Stock indexes initially sank following the Fed's announcement, but they pared their losses, as Powell spoke at a press conference.

Wednesday marked the first time in more than a year the Fed has not hiked rates at a meeting. Inflation is still too high for comfort, causing misery especially for those with lower incomes.

In energy trading, benchmark U.S. crude added 33 cents to $68.60 a barrel in electronic trading on the New York Mercantile Exchange. It gave up $1.15 on Wednesday to $68.27 a barrel.

Brent crude, the international standard, rose 35 cents to $73.55 a barrel.

In currency trading, the U.S. dollar cost 141.31 Japanese yen, up from 140.07 yen. The euro cost $1.0808, down from $1.0833.

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AP Business Writer Stan Choe contributed.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama