Asian shares were mostly lower on Wednesday ahead of a decision by the Federal Reserve on interest rates. In Japan, concerns arise regarding how the central bank can navigate away from near-zero interest rates amidst higher inflation and falling wages. The Bank of Japan will issue a policy decision on Friday, with worries that higher prices may depress consumer spending and hurt the overall economy. Tokyo’s Nikkei 225 and Chinese shares fell, while gains were seen in South Korea and Taiwan.
Australia’s S&P/ASX 200 and Bangkok’s SET edged lower, while technology shares pushed prices higher in South Korea and Taiwan. Trading on Wall Street was subdued on Tuesday, with the S&P 500 and Nasdaq setting record highs driven by gains in tech stocks. Apple surged 7.3% after highlighting its push into artificial intelligence technology, while the Dow Jones Industrial Average lagged behind. Key events for the market this week include updates on inflation and interest rates by the U.S. government and the Federal Reserve.
The U.S. consumer price index is expected to remain unchanged at 3.4% in May, down from a peak of 9.1% in 2022 but still above the Fed’s target rate of 2%. Wall Street is hoping for one or two cuts to the main interest rate this year, but no changes are expected at the current meeting. Data on the economy have been mixed, with traders hoping for a slowdown that avoids a recession but eases inflation. Affirm Holdings climbed 11% on news of integration with Apple Pay, while Paramount Global dropped following reports of failed merger talks with Skydance Media.
In other trading, U.S. crude oil prices climbed, with benchmark crude at $78.34 per barrel and Brent crude at $82.28 per barrel. The U.S. dollar rose against the Japanese yen, while the euro slipped. The Fed’s latest forecasts on interest rates and the economy are eagerly awaited, with hopes for a manageable economic slowdown and easing inflation. The strong jobs market and consumer spending have supported the economy, but concerns remain about consumer stress, especially among lower-income individuals. Policymakers will provide further insights on their projections in the coming days.
