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Asian shares mixed after Wall St falls on rate hike worries

Shares are mixed in Asia after Wall Street gave back some of its recent gains on persisting uncertainty over interest rates and inflation

Elaine Kurtenbach
Thursday 09 February 2023 01:11 EST

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Shares were mixed Thursday in Asia after Wall Street gave back some of its recent gains on persisting uncertainty over interest rates and inflation.

Benchmarks declined in Tokyo, Seoul and Sydney but rose in Hong Kong and Shanghai. U.S. futures were higher while oil prices edged up.

Wall Street retreated Wednesday following a set of mixed earnings reports. The pullback also followed comments Tuesday by Federal Reserve Chair Jerome Powell, who signaled that an exceptionally strong U.S. jobs report last Friday would not oblige the central bank to return to a more aggressive stance on raising interest rates to tame inflation.

Another Fed official, John Williams, the president of the Federal Reserve Bank of New York, said Wednesday that he still thinks the Fed’s main interest rate hitting a target of 5% to 5.5% by the end of the year is “a very reasonable view.” The federal funds rate is now at a range of 4.50% to 4.75%. Williams spoke at a CFO Network summit hosted by the Wall Street Journal.

“Traders are keeping a close eye on policymakers’ remarks to position accordingly ahead of key upcoming inflation figures and job market data before next month’s rate decision," Anderson Alves of ActivTrades said in a commentary.

Tokyo's Nikkei 225 fell 0.1% to 27,584.35 and the Kospi in Seoul was little changed at 2,483.16. Australia's S&P/ASX 200 declined 0.5% to 7,490.30. In Mumbai, the Sensex gained 0.1%. Shares fell in Bangkok, Taiwan and Singapore.

Hong Kong's Hang Seng index gained 1.3% to 21,557.09, while the Shanghai Composite index advanced 1% to 3,266.14.

On Wednesday, the S&P 500 fell 1.1% to 4,117.86 and the Nasdaq fell 1.7% to 11,910.52. The Dow Jones Industrial Average gave back 0.6% to 33,949.01.

The Fed has been saying that it plans to hike interest rates a couple more times and then hold them at a high level at least through the end of the year. Williams warned that interest rates may need to go higher if stock prices rally and bond yields fall too much, among other loosening financial conditions, because that could drive inflation higher.

Companies have so far been reporting relatively lackluster earnings for the last three months of 2022, as rising costs eat into their margins.

Entertainment giant Walt Disney rose 5.5% in afterhours trading after it reported surprisingly good fiscal first-quarter financial results, but it gave up nearly all of that gain after it said it will cut about 7,000 jobs as part of a “significant transformation” announced by CEO Bob Iger. The job cuts amount to about 3% of the entertainment giant’s global workforce.

Chipotle Mexican Grill fell 5% after it reported weaker profit and revenue for the latest quarter than Wall Street expected.

Jack Henry & Associates, a company in the financial technology industry, sank 9.3% for one of the biggest drops in the S&P 500 after it reported weaker results than expected and trimmed financial forecasts for the full fiscal year.

Lumen Technologies tumbled 20.8% despite reporting stronger results than expected. Its forecasts for some financial measures in 2023 fell short of analysts' expectations.

On the winning side was CVS Health, which gained 3.5% after topping Wall Street’s forecasts for revenue and profit. It also said it would buy Oak Street Health, a primary care company, in a deal it valued at about $10.6 billion.

U.S. benchmark crude oil gained 6 cents to $78.53 per barrel in electronic trading on the New York Mercantile Exchange. It added $1.33 on Wednesday to $78.47.

Brent crude, the pricing basis for international trading, advanced 11 cents to $85.20 per barrel.

The U.S. dollar slipped to 131.29 Japanese yen from 131.42 yen. The euro rose to $1.0740 from $1.0714.

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