Asian Stocks Mixed as Fed Says Inflation Is Declining

On Wednesday, Asian markets were mixed after the US Federal Reserve Chairman Jerome Powell signaled overnight that the central bank may soon pause its rate hikes due to falling inflation.

The Nikkei 225 was down 0.61% at 9.03 a.m. (Thai time), pulled by sliding shares of Nintendo and Softbank following poor results.

The Kospi in South Korea was the region’s best performer, up 1.11%. In response to the Reserve Bank of Australia’s 25 basis point raise on Tuesday, which was mostly in line with expectations but included hawkish comments, the S&P/ASX 200 rose by 0.23%.

The Hang Seng index in Hong Kong saw a drop of 0.20%. In mainland China, the Shanghai Composite dropped 0.10%.

All three major indexes on Wall Street ended the day in the green, with the Nasdaq Composite registering the greatest daily gain, up by about 2%. Investors were relieved to hear Powell’s comments on disinflation, which they took to mean the Fed might pause its interest rate hiking effort.

On Tuesday, Federal Reserve Chairman Jerome Powell said that inflation is beginning to drop, but he expects it to be a long process, and he warned that interest rates could climb more than markets predict if the economic data doesn’t cooperate.

At a recent event in Washington, D.C., the head of the central bank stated, “The disinflationary process, the process of getting inflation down, has begun and it has begun in the goods sector, which is about a quarter of our economy.” Still, there is a long way to go. The process is still in its early stage, he added.