Asian shares trade mixed after Wall Street falls following Fed rate hike

Asian shares were mixed on Thursday after Wall Street closed lower following the Federal Reserve’s interest rate hike decision for the first time in three years.

US futures were higher.

The quarter of a percentage point increase brings the Fed’s key rate to a target range of 3.75 per cent-4.00 per cent, as it attempts to control US inflation that’s been stubbornly above its target.

Japan’s Nikkei 225 index was 0.2 per cent higher at 64,067.53. South Korea’s Kospi gained 0.9 per cent to 6,778.49. The Hong Kong Hang Seng fell 0.7 per cent to 24,533.46, while the Shanghai Composite index lost 0.4 per cent to 3,877.46.

Australia’s S&P/ASX 200 climbed 0.3 per cent to 8,718.20.

Taiwan’s Taiex jumped 1.3 per cent, while India’s Sensex edged up 0.3 per cent.

On Wednesday, Wall Street’s benchmark S&P 500 dropped 0.5 per cent. The Dow Jones Industrial Average fell 1.2 per cent, and the technology-heavy Nasdaq composite was mostly unchanged.

Market reactions were “pretty much expected since the rate rise was also in line with market expectation,” said Lorraine Tan, director of equity research for Asia at Morningstar on Thursday, but the ongoing Iran war is likely to keep pressure on inflation.

Following the Fed’s announcements, the two-year US Treasury yield jumped to 4.72 per cent compared to around 4.67 per cent late Tuesday. The yield on the 10-year Treasury remained at around 5.00 per cent at an elevated level.

Government bond yields have remained higher since the war as the war-driven energy shock adds to inflationary pressure while investors also worry about growing US national debt.

The US dollar fell early Thursday to 156.04 Japanese yen from 156.26 yen. The euro was trading at $1.1467, up from $1.1465.

Oil prices edged slightly higher, as there are still limited oil flows in the Strait of Hormuz, the narrow waterway crucial for global oil transport, and as Saudi Arabia’s closure of a key oil pipeline adds to oil supply pressure as it moves to repair the pipeline.

Brent crude, the international standard, traded 0.1 per cent higher at $105.89 early Thursday.