Asian stocks rise ahead of Fed decision on rate hike | Economic news

By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) — Asian stocks rose on Wednesday as investors awaited a widely expected decision from the U.S. Federal Reserve on interest rate policy.

Japan’s benchmark Nikkei 225 jumped 1.7% in morning trade to 25,784.71. Australia’s S&P/ASX 200 added 0.9% to 7,160.00. The South Korean Kospi gained 0.8% to 2,641.23. Hong Kong’s Hang Seng rose 2.1% to 18,807.58. while the Shanghai Composite fell 0.4% to 3,050.59.

At a policy meeting later Wednesday, the Fed is expected to raise its short-term policy rate by 0.25 percentage points. This would be the first increase since 2018, pulling it off its all-time high of near zero, and likely the start of a series of increases.

The Fed is trying to slow the economy enough to stem the high inflation that is sweeping the country while avoiding triggering a recession.

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Inflation is already at its highest level in generations, and the most recent figures do not include the spike in oil prices after Russia invaded Ukraine. The move comes as central banks around the world prepare to end support for the global economy following the outbreak of the pandemic.

“The allusion to ‘rearranging the deck chairs on the Titanic’ is not intended to invoke desperation. Rather, it is intended to convey a sense of the inevitability of the coming Fed tightening cycle,” Tan Boon Heng said. of Mizuho Bank in Singapore.

On Wall Street, the S&P 500 gained 2.1% to 4,262.45, ending a three-day losing streak after a report showed the rapid acceleration in inflation came to a halt in the wholesale level last month. The Dow Jones Industrial Average gained 1.8% to 33,544.34 and the Nasdaq rose 2.9% to 12,948.62. The Russell 2000 Small Business Index rose 1.4% to 1,968.97.

Renewed concerns about COVID-19 in some regions along with a long list of other concerns have caused wild hour-to-hour swings in the markets over the past few weeks. The war in Ukraine has pushed up the prices of oil, wheat and other commodities that the region produces. This increases the threat that already high inflation will persist and combine with a potentially stagnant economy.

Investors are also watching talks between Russia and Ukraine. Ukrainian presidential aide Ihor Zhovkva said the video discussions held by representatives of the two nations on Tuesday were “more constructive”, noting that Russia has stopped broadcasting its demands for Ukraine’s surrender.

“If ever so light, at least there’s still growing optimism about Ukraine, combined with optimism about inflation, oil in particular, and optimism that the Fed won’t be more hawkish than what’s already integrated into the market,” said Sam Stovall, Chief Investment Officer. strategist at CFRA.

US data released on Tuesday showed that inflation was still very high at the wholesale level last month, but at least it has not accelerated. Producer prices rose 10% in February from a year earlier, the same rate as in January. Month-on-month inflation rose 0.8% in February from January, versus 0.9% expected. That’s a slowdown from January’s 1.2% month-over-month increase.

Benchmark U.S. crude slid earlier on Tuesday, but then leveled off. It gained 79 cents to $97.23 a barrel in electronic trading on the New York Mercantile Exchange.

A barrel of US crude fell 6.4% to $96.44 on Monday. It had briefly topped $130 last week when concerns about supply disruptions due to the war in Ukraine were at their height.

Brent crude, the international price standard, added $1.10 to $101.01 a barrel.

Overnight, the reprieve on fuel prices helped a wide variety of stocks. Airlines led the way after several raised their revenue forecasts this quarter. American Airlines, Delta Air Lines and United Airlines all climbed 8% or more.

In other developments, nickel trading was due to resume on the London Metal Exchange on Wednesday, just over a week after it was suspended when the metal’s price soared to over $100,000 a tonne.

Russia is the world’s third largest producer of nickel. Its price and that of many other commodities rose on speculation of possible supply disruptions as Russia faces widening economic sanctions following its invasion of Ukraine.

In currency trading, the US dollar fell from 118.31 yen to 118.25 Japanese yen. The Euro traded at $1.0969, down from $1.0955 previously.

AP Business Writers Stan Choe and Alex Veiga contributed.

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