Asian equities mostly traded within a narrow range on Wednesday amid persistent concerns about prolonged higher U.S. interest rates. Japanese indices retreated from recent record highs as a tech-led rally cooled.
The cautionary sentiment was influenced by a reserved approach in Wall Street ahead of crucial PCE price index data, the Federal Reserve's favored inflation gauge, scheduled for release on Thursday.
There were repeated warnings from Fed officials about sticky inflation, signaling expectations of prolonged higher interest rates. U.S. stock futures displayed a mild negative trend during Asian trading hours. The prospect of higher-for-longer rates adds to the near-term pressure on Asian stocks.
In Japan, the Nikkei 225 and TOPIX both fell by 0.3%, retracting from their record highs in the previous session. Investors opted to secure recent profits amid diminishing risk appetite globally.
Additionally, an unexpectedly high reading on Japanese inflation fueled speculation about a potential interest rate hike by the Bank of Japan as early as April, potentially ending the prolonged era of ultra-dovish, low-interest rates in Japanese markets.
Meanwhile, in China, the Shanghai Shenzhen CSI 300 and Shanghai Composite indices showed limited gains and traded in a flat-to-low range, reflecting increased concerns about the country's troubled property market.
Country Garden Holdings faced a liquidation petition in a Hong Kong court due to difficulties repaying a HK$1.6 billion ($200 million) loan, contributing to the deepening property crisis in China. The property-related losses, along with a broader loss of confidence among Chinese consumers, weighed on Hong Kong's Hang Seng index, causing a 0.5% decline.
Overall, caution regarding U.S. interest rates restrained significant buying in broader Asian markets. Australia's ASX 200 remained flat as the Consumer Price Index (CPI) inflation data for January remained steady, though still above the Reserve Bank's target range, indicating minimal changes to the bank's hawkish outlook.
Futures for India's Nifty 50 index suggested a slightly positive opening, driven by gains in U.S. tech stocks. South Korea's KOSPI was a standout performer, rising 0.6% as it recovered from two consecutive days of losses.
Paraphrasing text from "Investing" all rights reserved by the original author.
