HONG KONG — World markets wobbled in Thursday trading after U.S. stocks swung to a mixed finish with the Federal Reserve delaying cuts to interest rates.
U.S. shares were set to rise, as the futures for the S&P 500 surged 0.5% and for the Dow Jones Industrial Average were 0.4% higher.
European markets opened mixed ahead of a busy day for corporate earnings. London’s FTSE 100 was up 0.4% to 8,155.28 in early trading. Germany’s DAX edged less than 0.1% lower to 17,925.06 and the CAC 40 in Paris lost 0.7% to 7,926.97.
Tokyo’s Nikkei 225 index slipped 0.1% and closed at 38,236.07.
The Japanese yen surged as much as 2% in early Asia hours Thursday, driven by speculation of another round of yen-buying intervention by Japanese authorities and a weaker U.S. dollar following the Fed meeting. Later, the yen reversed its course and erased its previous gains. The dollar was trading at 155.44 yen, up from 154.91 yen.
“As expected, Japan’s Ministry of Finance, via the Bank of Japan, was back selling U.S. dollars to stabilize the yen. Indeed, the Japanese government is digging into their sizable 1.2 trillion USD war chest, looking to take profit on the dollar they bought back in 2000,” Stephen Innes, managing partner at SPI Asset Management, said in a commentary. He said the hope was to stabilize the yen at around 155-157 to the dollar.
In South Korea, the Kospi was down 0.3% to 2,683.65 after official data showed consumer prices in April rose 2.9% year on year, a slower pace compared to March.
Hong Kong’s Hang Seng index added 2.4% to 18,187.56. Other markets in China remained closed for the Labor Day holiday.
Elsewhere, Australia’s S&P/ASX 200 advanced 0.2% to 7,587.00.
On Wednesday, the S&P 500 fell 0.3% to 5,018.39 after the Fed held its main interest rate at its highest level since 2001, just as markets expected. The index had rallied as much as 1.2% in the afternoon before giving up all the gains at the end of trading.
The Dow Jones Industrial Average rose 0.2% to 37,903.29, and the Nasdaq composite lost 0.3% to 15,605.48.
On the downside for financial markets, Federal Reserve Chair Jerome Powell said out loud the fear that’s recently sent stock prices lower and erased traders’ hopes for imminent cuts in interest rates: “In recent months, inflation has shown a lack of further progress toward our 2% objective.” He also said that it will likely take “longer than previously expected” to get confident enough to cut rates, a move that would ease pressure on the economy and investment prices.
At the same time, though, Powell calmed a fear swirling in the market that inflation has remained so high that additional hikes to rates may be necessary.
“I think it’s unlikely that the next policy rate move will be a hike,” he said.
The Fed also offered financial markets some assistance by saying it would slow the pace of how much it’s shrinking its holdings of Treasurys. Such a move could grease the trading wheels in the financial system, offering stability in the bond market.
Traders themselves had already downshifted their expectations for rate cuts this year to one or two, if any, after coming into the year forecasting six or more.
Powell had already hinted rates may stay high for a while. That was a disappointment for Wall Street after the Fed earlier had indicated it was penciling in three cuts to rates during 2024.
In energy trading, benchmark U.S. crude ended three days of decline and rose 58 cents to $79.58 a barrel. Brent crude, the international standard, was up 69 cents to $84.13 a barrel.
In currency trading, the euro cost $1.0713, up from $1.0709.
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