By Associated Press
TOKYO — Asian shares were mixed in muted trading Wednesday as many investors stayed on the sidelines ahead of a U.S. Federal Reserve meeting that will indicate how aggressive it will be in fighting inflation.
Japan’s benchmark Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +1.97% slipped 0.4% in morning trading, while South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.16% edged up 0.2%. Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +0.47% added 0.3%, and the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.55% rose 0.3%. Trading was closed in Australia for Australia Day. Benchmark indexes in Singapore /zigman2/quotes/210597985/delayed SG:STI +0.01% , Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 +0.91% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX +0.42% edged higher, while stocks fell in Malaysia /zigman2/quotes/210598052/delayed MY:FBMKLCI +0.10% .
Worries about omicron remain throughout the region. In China, reported COVID-19 cases have dropped but worries remain, especially ahead of the Lunar New Year holidays next week and the Beijing Olympics opening Feb. 4.
In Japan, the government has widened to much of the nation restrictive measures, which ask restaurants to close early. But surveys show people are responding more to the reports of surging cases, not necessarily the government measures.
On Wall Street, shares came well off their lows by late afternoon. But another burst of selling in the final hour of trading pulled them lower again. Technology stocks were the biggest drag on the market.
The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.60% fell 1.2% after having been down as much as 2.8%. The benchmark index has been falling steadily all month and is now down 9.2% from the all-time high it set Jan. 3. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.25% slipped 0.2% and the tech-heavy Nasdaq /zigman2/quotes/210598365/realtime COMP +1.07% gave up 2.3%.
Higher inflation has been squeezing businesses and consumers, and the Federal Reserve is expected to combat it in 2022 by raising interest rates. Investors fear that the Fed could either be moving too late or could be too aggressive. The central bank issues its latest policy statement Wednesday.
The virus pandemic still hovers over the economy and threatens to crimp progress with every new wave. The International Monetary Fund cited the omicron variant as the reason it has downgraded its forecast for global economic growth this year.
And a potential conflict between Russia and Ukraine threatens to push energy prices even higher while forcing more countries to focus on fighting a war instead of inflation and COVID-19.
Wall Street is dealing with signs of slowing economic growth because of COVID-19 and a Fed that can’t really go back on what it said it would do, said Barry Bannister, chief equity strategist at Stifel.
“The market has come to terms with that and that’s a big deal,” he said. “Fiscal and monetary tightening, together, is tough on financial assets when they’re coming off of a rip-roaring party from stimulus.”
Still, the fact that the major stock indexes came off their lows of the day could be a sign that some investors are betting that a dimmer outlook for economic growth may prompt the Fed to take a more measured approach to raising interest rates.
“Weaker economic growth projections have contributed to investors breathing a sigh of relief that the Fed won’t have to be overly aggressive,” said Sam Stovall, chief investment strategist at CFRA.
In energy trading, benchmark U.S. crude lost 26 cents to $85.34 a barrel. Brent crude , the international standard, fell 10 cents to $88.10 a barrel.
In currency trading, the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.3506% was unchanged at 113.87 Japanese yen.