Asian markets mixed in slowing trade ahead of Fed meeting

TOKYO — Asian stocks were mixed in muted trading on Wednesday as many investors stayed away ahead of a U.S. Federal Reserve meeting that will signal how aggressive it will be in tackling inflation.

The Japanese reference Nikkei 225 NIK,
-0.22%
slid 0.4% in morning trade, while South Korea’s Kospi 180721,
+0.16%
increased slightly by 0.2%. Hang Seng HSI from Hong Kong,
-0.13%
added 0.3%, and the Shanghai Composite SHCOMP,
+0.01%
increased by 0.3%. Trade was closed in Australia for Australia Day. Benchmarks in Singapore STI,
+0.94%,
Taiwan Y9999,
+0.05%
and Indonesia JAKIDX,
-0.19%
rose slightly, while shares fell in Malaysia FBMKLCI,
+0.65%.

Concerns about omicron persist across the region. In China, reported cases of COVID-19 have plummeted but concerns remain, particularly ahead of the Lunar New Year holiday next week and the opening of the Beijing Olympics on February 4.

In Japan, the government has extended restrictive measures to much of the country, which asks restaurants to close earlier. But surveys show that people react more to rising case reports, not necessarily to government measures.

On Wall Street, equities are well off their late afternoon lows. But another wave of selling in the last hour of trading brought them down again. Tech stocks were the biggest drag on the market.

The S&P 500 SPX,
-1.22%
fell 1.2% after losing up to 2.8%. The benchmark has fallen steadily all month and is now down 9.2% from the all-time high it hit on Jan. 3. The Dow Jones Industrial Average DJIA,
-0.19%
slid 0.2% and the tech-heavy Nasdaq COMP
-2.28%
lost 2.3%.

Rising inflation has weighed on businesses and consumers, and the Federal Reserve is expected to combat it in 2022 by raising interest rates. Investors fear that the Fed may act too late or be too aggressive. The central bank releases its latest policy statement on Wednesday.

The virus pandemic still hangs over the economy and threatens to stall progress with each new wave. The International Monetary Fund cited the omicron variant as the reason it lowered its forecast for global economic growth this year.

And a potential conflict between Russia and Ukraine threatens to further drive up energy prices while forcing more countries to focus on war rather than inflation and COVID-19.

Wall Street faces signs of slowing economic growth due to COVID-19 and a Fed that can’t quite go back on what it said it would do, chief strategist Barry Bannister said shares in Stifel.

“The market has accepted that and it’s a big deal,” he said. “Fiscal and monetary tightening together are tough on financial assets as they emerge from a heartbreaking stimulus spree.”

Still, the fact that major stock indexes hit their lows for the day could be a sign that some investors are betting a gloomier outlook for economic growth could prompt the Fed to take a more measured approach to raising interest rates. .

“Weaker economic growth projections have helped push investors to breathe a sigh of relief that the Fed won’t have to be too aggressive,” said Sam Stovall, chief investment strategist at CFRA.

In energy trading, benchmark US crude CLH22,
-0.49%
lost 26 cents to $85.34 a barrel. Brent crude BRNH22,
-0.28%,
the international standard, fell 10 cents to $88.10 a barrel.

In currency trading, the US dollar USDJPY,
-0.02%
remained unchanged at 113.87 Japanese yen.

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