TOKYO — Asian stocks mostly fell on Wednesday as investors eagerly awaited a widely expected interest rate hike from the U.S. Federal Reserve as it strives to crush the highest inflation in decades. decades.
Japan’s benchmark Nikkei 225 fell 1.4% in morning trade to 27,308.66. Australia’s S&P/ASX 200 fell 1.4% to 6,712.40. The South Korean Kospi fell 0.9% to 2,346.62. Hong Kong’s Hang Seng fell 1.4% to 18,524.48, while the Shanghai Composite fell 0.2% to 3,115.08.
Global tensions add to uncertainties. The Russian-controlled regions of eastern and southern Ukraine have announced plans to begin voting this week to become integral parts of Russia.
Kremlin-backed efforts to gobble up four regions could pave the way for Moscow to escalate the war against Ukraine. Russian President Vladimir Putin recently lambasted what he described as US efforts to preserve global dominance and ordered officials to increase arms production.
“Asian stocks traded in defensive mode on Wednesday. There were geopolitical tensions over Russia and Ukraine, where separatists are due to hold a referendum in some regions, and traders were waiting for an update from Putin,” he said. said Anderson Alves of ActivTrades.
On Wall Street, the S&P 500 index fell 1.1% to 3,855.93 as more than 90% of stocks and all sectors in the benchmark lost ground. The Dow Jones Industrial Average fell 1% to 30,706.23. The Nasdaq composite also fell 1% to 11,425.05.
The selloff came as traders waited to see how much the Fed would hike interest rates at its meeting that ends Wednesday.
“The market is definitely bracing for the worst and you’re seeing some mild selling pressure,” said Paul Kim, CEO of Simplify ETFs.
Retailers, technology stocks, healthcare companies and banks were among the highest weightings in the market. Best Buy fell 4.1%, Microsoft fell 0.8%, Abbott Laboratories fell 1.7% and JPMorgan Chase closed down 2%. Exxon Mobil fell 0.8%.
Small company stocks fell more than the broader market. The Russell 2000 Index fell 1.4% to 1,787.50.
Bond yields mostly rose slightly. The 10-year Treasury yield, which influences mortgage rates, rose to 3.56% from 3.52% late Monday and is trading at its highest levels since 2011.
The 2-year Treasury yield, which tends to track Fed action expectations, held steady at 3.95%, hovering around its highest levels since 2007.
Stocks fell and Treasury yields rose as the Fed hiked borrowing costs in hopes of curbing the highest inflation in four decades.
Fed Chairman Jerome Powell bluntly warned in a speech last month that rate hikes “would cause pain.”
“He did everything he could to signal that this would be another aggressive move,” said Liz Young, head of investment strategy at SoFi.
The Fed is expected to raise its key short-term rate by three-quarters of a point for the third time at its meeting on Wednesday. That would take its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level in 14 years, and zero at the start of the year.
Beyond that, investors will focus on what Powell has to say, both in the Fed’s latest interest rate policy statement and at an afternoon press conference, to whether the central bank remains primarily focused on reducing inflation, or if there is a hint the Fed is paying more attention to the impact of higher rates on the economy.
Wall Street fears the rate hikes will go too far in slowing economic growth and pushing the economy into a recession.
Ford fell 12.3% for the S&P 500’s biggest drop after cutting its third-quarter profit forecast as a parts shortage will leave it with up to 45,000 unfinished vehicles on its lots at the end of the quarter. September 30. Last week, FedEx and General Electric warned investors of the damage to their operations from inflation.
The United States is not alone in suffering from runaway inflation or dealing with the impact of efforts to curb high prices.
The Bank of Japan began a two-day monetary policy meeting on Wednesday, although analysts expect the central bank to stick to its accommodative monetary policy. Rate decisions from Norway, Switzerland and the Bank of England come next.
In energy trading, benchmark U.S. crude rose 15 cents to $84.09 a barrel in electronic trading on the New York Mercantile Exchange. It fell 1.5% on Tuesday, weighing on energy stocks. Brent crude, the international standard, added 22 cents to $90.84 a barrel.
In currency trading, the US dollar fell from 143.74 yen to 143.81 Japanese yen. The euro fell to 99.64 cents from 99.73 cents.
AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama