Asian stocks mixed as traders await Fed update

Beijing Asian stocks were mixed Monday as traders looked ahead to the Federal Reserve’s summer conference for signs of whether the US central bank thinks inflation is under control or more interest rate hikes are needed to cool inflation. Shanghai and Hong Kong retreated while Tokyo and Seoul advanced. Oil prices rose. Wall Street’s benchmark S&P 500 index edged down 0.1 per cent on Friday, to end the week lower ahead of the Jackson Hole, Wyoming, conference. Fed officials have used the event in previous year to indicate changes in policy direction. There “may be rude hawkish surprises” for investors who assume rate hikes are finished, said Tan Boon Heng of Mizuho Bank in a report. Chair Jerome Powell “may allude to structurally higher (and potentially more volatile) inflation being the new norm.” The Shanghai Composite Index lost 0.4 per cent to 3,119.04 while the Nikkei 225 in Tokyo advanced 0.4 per cent to 31,573.96. The Hang Seng in Hong Kong lost 1.3 per cent to 17,713.68. The Kospi in Seoul gained 0.1 per cent to 2,507.16 while Sydney’s S&P-ASX 200 shed 0.3 per cent to 7,124.60. New Zealand and Singapore retreated, while Bangkok and Jakarta gained.

On Wall Street, the S&P 500 declined to 4,369.71 on Friday. The Dow Jones Industrial Average added 0.1 per cent to 34,500.66. The Nasdaq composite slipped 0.2 per cent to 13,290.78. The S&P 500 soared in the first seven months of 2023 but has given back more than one-quarter of those gains after critics warned the market embraced the notion too early that inflation was under control and rate hikes were finished. Some investors are shifting money to bonds as higher interest rates make their payout bigger and less risky.