Global indices turn sluggish

Tokyo Global shares were mostly lower in muted trading Wednesday ahead of a speech by US Federal Reserve Chair Jerome Powell that might point the way for future interest rate policy. France’s CAC 40 slipped 0.2 per cent to 6,971.37 and Germany’s DAX lost 0.3 per cent to 15,108.60. Britain’s FTSE 100 edged up less than 0.1 per cent to 7,413.84. The future for the S&P 500 was down less than 0.1 per cent while that for the Dow industrials was unchanged. Powell is due to address a conference in Washington, D.C., early Wednesday.

Last week, investors took comments he made to suggest the Fed may finally be done with hiking interest rates this time around. Inflation has been moderating since peaking in the summer of 2022, and a recent jump in Treasury yields may be acting like a substitute for more rate hikes. Since then Fed officials have indicated more increases might still be needed if inflation does not abate further. The Fed’s main interest rate is now at its highest level since 2001, above 5.25 per cent. The 10-year Treasury has fallen from above five per cent to 4.60 per cent as of early Wednesday. Investors in Asia also are turning their attention to prospects for improved China-US relations from meetings next week on the sidelines of a Pacific Rim summit.

The Asia-Pacific Economic Cooperation forum meetings in San Francisco offer an opportunity for top leaders from the US and China to mend troubled trade and political ties. Presidents Joe Biden and Xi Jinping are due to meet then, and White House officials expect to make some modest announcements as part of the tete-a-tete, but fundamental differences in the relationship will remain unchanged. US Treasury Secretary Janet Yellen is set to meet Thursday and Friday with Chinese Vice Premier He Lifeng in San Francisco before finance ministers of the APEC member nations officially kick off the summit Saturday.

Hong Kong’s Hang Seng shed 0.5 per cent on Wednesday to 17,588.46, while the Shanghai Composite declined 0.2 per cent to 3,052.37. Gloom over China’s worse-than-expected export data offset any positive momentum from an upgrade to its growth forecast by the International Monetary Fund. It raised its GDP growth forecast for 2023 to 5.4 per cent from 5 per cent but predicted that growth will slow next year. Japan’s benchmark Nikkei 225 dropped 0.3 per cent to finish at 32,166.48. South Korea’s Kospi lost 0.9 per cent to 2,421.62. Australia’s S&P/ASX 200 gained 0.3 per cent to 6,995.40.

Moody’s Investors Service affirmed the Government of Japan’s A1 long-term foreign currency and local currency issuer and local currency senior unsecured ratings. The outlook was maintained at stable.