Asian Stocks Mixed as Fed Signals More Rate Hikes

Asian stocks were mixed on Tuesday after a rally in US Wall Street faded, with Federal Reserve officials signaling that the central bank will likely need to hike interest rates above 5% before resting and holding for some time.

As of 9.30 A.M. (Thai time), in Japan, the Nikkei 225 was up 0.96% after reopening following a public holiday. The Kospi in South Korea rose 0.56%.

Hong Kong’s Hang Seng index and mainland China’s Shanghai Composite were traded relatively flat.

Australia’s S&P/ASX 200 inched down fractionally.

According to Bloomberg, the president of the Federal Reserve Bank of San Francisco, Mary Daly, said on Monday that interest rates will be raised to over 5%, putting a damper on traders’ hopes for a quick end to aggressive rate hikes as global inflation cools. Raphael Bostic, her Atlanta counterpart, said that policymakers should rise over 5% by early in the second quarter and then remain on hold for “a long time.”

Traders’ focus this week has been centered on Thursday’s US consumer price index report, which is one of the last such readings policymakers will review before their January 31-February 1 meeting.

Bloomberg Intelligence strategist Nitin Chanduka expects profit taking in Asian markets due to headwinds from tighter financial rules and little respite in the Fed rate-hike outlook.