Asian shares were mixed on Tuesday after Wall Street retreated, with surprisingly strong U.S. manufacturing data causing uncertainty about the timing of Federal Reserve interest rate cuts. Hong Kong saw a 2.2% gain, while the Shanghai Composite index edged 0.1% lower. China’s Vanke reported a significant decline in core profit, leading to state banks providing financial support. In February, China’s consumer price index rebounded, driven by holiday season consumption, while the producer price index experienced a decline.
Tokyo’s Nikkei 225 closed slightly higher, while South Korea’s Kospi and Australia’s S&P/ASX 200 also saw mixed results. The S&P 500 and Dow Jones Industrial Average dipped, while the Nasdaq composite added slightly. Treasury yields rose after U.S. manufacturing unexpectedly returned to growth, signaling continued strength in the economy. This could drive profit growth for companies but may keep upward pressure on inflation, potentially affecting Fed interest rate decisions.
Expectations for Fed rate cuts have been a major factor in the stock market’s recent surge, with hopes for cuts to combat inflation. However, tough talk from Fed officials may suggest that interest rates could stay higher for longer than anticipated. Economic reports coming this week, including updates on job openings and U.S. services businesses, could influence the Fed’s decisions. Analysts expect a report on Friday to show a slight cooling in hiring, which could ease concerns about inflation.
On the commodity front, U.S. benchmark crude oil and Brent crude oil both saw gains, while the dollar strengthened slightly against the Japanese yen and the euro. The upcoming economic reports and Fed decisions are key factors influencing market sentiment, with traders closely watching for any signs of the Fed’s intentions regarding interest rates. The balance between strong economic performance, inflation concerns, and potential Fed actions will continue to drive market movements in the coming days.
