Asian stock markets were mixed Tuesday after Wall Street sank under pressure from interest rate worries, Japanese wages rose and Australia's central bank hiked its benchmark lending rate.
Shanghai, Hong Kong and Seoul advanced. Tokyo and Sydney declined. Oil prices rose.
Wall Street sank for a second day Monday after unexpectedly strong U.S. data on hiring and wages dampened hopes the Federal Reserve might decide it has succeeded in cooling inflation and can wind down plans for more rate hikes.
Traders were looking ahead to a speech by Fed Chair Jerome Powell in Washington for possible clues about rate plans. Some are counting on a U.S. rate cut as early as late 2023 despite comments by Fed officials that they will stay elevated for an extended period.
Expectations for the Fed to reverse course are unrealistic, Clifford Bennett of ACY Securities said in a report.
“The mismatching of financial market pricing and economic reality is both stark and stretched,” Bennett said.
The Nikkei 225 in Tokyo lost less than 0.1% to 27,692.28 after the government reported wages rose 4.8% over a year earlier in December. That was close to a three-decade high as workers press for higher pay to keep pace with inflation.
The Shanghai Composite Index rose 0.2% to 3,244.55 and the Hang Seng in Hong Kong advanced 1% to 21,422.97. The Kospi in Seoul added 0.6% to 2,453.80.
Sydney's S&P-ASX 200 lost 0.5% to 7,599.70 after the Reserve Bank of Australia raised its benchmark rate by 0.25 percentage points to 3.35%. The RBA said more rate hikes are planned to bring down inflation that is at a 33-year high of 7.8% to its target range of 2% to 3%.
India's Sensex opened down 0.2% at 60,378.10. New Zealand and Singapore declined while Jakarta advanced.
On Wall Street, the benchmark S&P 500 index fell 0.6% to 4,111.08. The Dow Jones Industrial Average lost 0.1% to 33,891.02 and the Nasdaq composite tumbled 1% to 11,887.45.
The yield on the two-year Treasury, which tends to track expectations for the Fed, leaped by an unusually wide margin to 4.47% from Friday's 4.29% and the previous day's 4.1%.
The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, jumped to 3.64% from 3.52% late Friday.
The Fed and central banks in Europe and Asia are trying to extinguish inflation that is at multi-decade highs by cooling economic activity. Traders worry they might be willing to tip the global economy into recession to achieve that.
Friday’s employment data showed the U.S. economy added twice as many jobs as expected last month despite higher interest rates. That is good for workers but the Fed worries wage gains will push up inflation. That fuels fears the U.S. central bank might push rates higher.
On Wall Street, Tyson Foods fell 4.6% on Monday after it reported weaker profit and revenue for its latest quarter than analysts expected.
Dell Technologies dropped 3% after it said it will cut about 5% of its workforce. The company's vice chairman said in a message to employees that “market conditions continue to erode with an uncertain future.”
In energy markets, benchmark U.S. crude gained 75 to $74.86 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 72 cents to $74.11 on Monday. Brent crude, the price basis for international oil trading, advanced 76 cents to $81.75 per barrel in London. It added $1.05 the previous session to $80.99.
The dollar fell to 132.27 Japanese yen from 132.67 yen. The euro rose to $1.0744 from $1.0728.
