Asian markets mixed as traders weigh rates outlook

HONG KONG, China — Asian markets fluctuated Wednesday as the latest rally ran out of steam due to a lack of major catalysts, while investors contemplated the outlook for monetary policy.

While Europe enjoyed a firm session, Wall Street was a little more tepid after surging in reaction to Friday’s below-forecast US jobs data, which ramped up bets on a Federal Reserve interest rate cut.

With the next major economic release on inflation not until next week and many big-ticket earnings releases out of the way, investors are keeping tabs on comments from central bankers, hoping for an idea about their plans.

“There was limited data on corporate earnings to worry the markets, with no unexpected surprises and a lack of major US economic data in the days ahead,” said Kyle Rodda at Capital.com.

READ: Asian shares mostly higher, though China benchmarks falter

“Debate continues within markets and among policymakers about the appropriate level for interest rates.”

Many have spent the year pushing back against market expectations for how many cuts will be enacted this year as inflation comes down, and with recent data suggesting that the battle still has a long way to go, they are sticking to their guns.

Borrowing costs may stay higher

The latest, Minneapolis Fed boss Neel Kashkari, said he thought borrowing costs would likely stay higher for some time so that officials could be sure prices were being brought under control and get inflation back to the two percent target.

“The most likely scenario is we sit here for an extended period of time,” he said, according to Bloomberg News.

“If inflation starts to tick back down or we see some marked weakening in the labor market then that might cause us to cut back on interest rates.”

But he added: “Or if we get convinced eventually that inflation is embedded or entrenched now at three percent and that we need to go higher, we would do that if we needed to.”

READ: Sideways day on Wall Street as London notches another record

However, he said, that bar was quite high.

The Dow and S&P 500 eked out small gains in New York, though the Nasdaq struggled.

Asian markets swung through the morning.

Hong Kong resumed its upward journey, having ended slightly lower Tuesday to snap a 10-day winning streak, while there were also gains in Sydney, Seoul, and Jakarta.

But Tokyo, Shanghai, Singapore, Wellington, Manila, and Taipei were all down.