World shares mixed after Wall Street falls on rate hike worries

BANGKOK –

Shares advanced in Europe after a mixed session Thursday in Asia as uncertainty persists over interest rates and inflation.

Benchmarks rose in Paris, London, Shanghai and Hong Kong but fell in Tokyo, Seoul and Sydney. U.S. futures gained while oil prices also were higher.

Germany’s DAX added 1.4% to 15,621.11 and the CAC 40 in Paris was up 1.4% at 7,220.36. Britain’s FTSE 100 gained 0.7% to 7,942.45. The future for the S&P 500 surged 0.8% and that for the Dow Jones Industrial Average was 0.7% higher.

Wall Street retreated Wednesday following a set of mixed earnings reports. The pullback also followed comments Tuesday by Federal Reserve Chair Jerome Powell, who signaled that an exceptionally strong U.S. jobs report last Friday would not oblige the central bank to return to a more aggressive stance on raising interest rates to tame inflation.

Another Fed official, John Williams, the president of the Federal Reserve Bank of New York, said Wednesday that he still thinks the Fed’s main interest rate hitting a target of 5% to 5.5% by the end of the year is “a very reasonable view.” The federal funds rate is now at a range of 4.50% to 4.75%. Williams spoke at a CFO Network summit hosted by the Wall Street Journal.

“Traders are keeping a close eye on policymakers’ remarks to position accordingly ahead of key upcoming inflation figures and job market data before next month’s rate decision,” Anderson Alves of ActivTrades said in a commentary.

In Asia, Tokyo’s Nikkei 225 fell 0.1% to 27,584.35 and the Kospi in Seoul fell 0.1% to 2,481.52. Australia’s S&P/ASX 200 declined 0.5% to 7,490.30. In Mumbai, the Sensex gained 0.2%. Shares fell in Bangkok, Taiwan and Singapore.

Hong Kong’s Hang Seng index gained 1.6% to 21,624.36, while the Shanghai Composite index advanced 1.2% to 3,270.38.

On Wednesday, the S&P 500 fell 1.1% and the Nasdaq fell 1.7%. The Dow industrials gave back 0.6%.

The Fed has been saying that it plans to hike interest rates a couple more times and then hold them at a high level at least through the end of the year. Williams warned that interest rates may need to go higher if stock prices rally and bond yields fall too much, among other loosening financial conditions, because that could drive inflation higher.

Companies have so far been reporting relatively lackluster earnings for the last three months of 2022, as rising costs eat into their margins.

Entertainment giant Walt Disney rose 5.5% in afterhours trading after it reported surprisingly good fiscal first-quarter financial results, but it gave up nearly all of that gain after it said it will cut about 7,000 jobs as part of a “significant transformation” announced by CEO Bob Iger. The job cuts amount to about 3% of the entertainment giant’s global workforce.

In other trading, U.S. benchmark crude oil gained 10 cents to US$78.57 per barrel in electronic trading on the New York Mercantile Exchange. It added $1.33 on Wednesday to $78.47.

Brent crude, the pricing basis for international trading, advanced 8 cents to $85.17 per barrel.

The U.S. dollar slipped to 130.91 Japanese yen from 131.42 yen. The euro rose to $1.0763 from $1.0714.