Asian stocks ended mixed on Friday amid worries about the U.S. Federal Reserve’s tightening cycle and a flare-up in COVID-19 cases in China despite strict measures to fight new outbreaks.
The dollar was headed for its best week in a month as hawkish remarks from several Federal Reserve officials suggested the Federal Reserve would continue to hike interest rates for an extended period.
St. Louis Fed President James Bullard said on Thursday that interest rates need to be increased further to between 5 percent and 7 percent to cool inflation. That would require more sharp increases in the Fed’s benchmark rate, which stands at 3.75 percent to 4 percent.
Oil edged up in Asian trading but was on track for a weekly loss of around 8 percent on concerns about potential lockdowns in top consumer China.
China’s Shanghai Composite Index dropped 0.6 percent to 3,097.24 amid worsening of the COVID situation in many cities. Hong Kong’s Hang Seng Index dipped 0.3 percent to 17,992.54.
Japanese shares closed a tad lower after data showed inflation in the country hit its fastest clip in 40 years in October. The Nikkei 225 Index slipped 0.1 percent to 27,899.77 and lost about 1.3 percent for the week, marking its first weekly loss in four.
The broader Topix finished marginally higher at 1,967.03. Growth shares were hit hard as long-term Treasury yields bounced from six-week lows.
Market heavyweight SoftBank Group tumbled 3.9 percent, while automakers Honda Motor, Nissan and Mitsubishi Motors climbed 1-3 percent as the yen stabilized around 140 per dollar.
Seoul stocks ended little changed, with the Kospi average ending 1.58 points higher at 2,444.48 amid Fed rate hike woes.
Australian markets eked out modest gains, with rate-sensitive financial stocks outperforming. The benchmark S&P ASX 200 Index rose 0.2 percent to 7,151.80, while the broader All Ordinaries Index ended 0.2 percent higher at 7,354.70.
OZ Minerals rallied 4 percent after receiving an improved offer from BHP Group.
Across the Tasman, New Zealand’s benchmark NZX-50 Index climbed 0.8 percent to 11,380.61 amid expectations the country’s central bank will hike rates by 75 basis points for the first time ever next week, following a succession of 50 basis point hikes in the five previous meetings.
U.S. stocks saw wild swings before closing lower overnight, while Treasury yields climbed on the back of mixed economic data and hawkish comments from St. Louis Federal Reserve President James Bullard.
Bullard said that previous interest-rate hikes have had a limited effect on inflation, and that there is room for the Fed to raise interest rates by at least another full percentage point to 5 percent and 5.25 percent, above the level currently priced in by financial markets.
The Dow ended flat with a negative bias, the tech-heavy Nasdaq Composite shed 0.4 percent and the S&P 500 eased 0.3 percent.
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