TOKYO—Global shares were mixed Wednesday as traders braced for updates on inflation, retail sales, and corporate earnings.
The British pound weakened against the U.S. dollar after the governor of the Bank of England, Andrew Bailey, confirmed the bank will not extend beyond Friday an emergency debt-buying plan introduced last month to stabilize financial markets.
The pound fell by almost 1 percent to just below $1.10 after Bailey spoke, before rallying slightly. Financial markets reeled, with the currency hitting a record low of $1.03, last month after the government announced plans for tax cuts without saying how it would pay for them.
France’s CAC 40 gained 0.2 percent to 5,843.01, while Germany’s DAX was nearly unchanged at 12,219.06. Britain’s FTSE 100 edged 0.1 percent higher to 6,892.39. The future for the S&P 500 was 0.5 percent higher while that for the Dow industrials rose 0.4 percent.
South Korea’s Kospi added 0.5 percent to 2,202.47 after the Bank of Korea raised its key rate by 0.5 percentage points, against the backdrop of the U.S. Fed rate hikes, which have boosted the value of the dollar against many other currencies, including the won.
Bank of Korea Gov. Rhee Chang-yong told reporters that most monetary policy board members want the terminal policy rate to be at 3.50 percent. Analysts at SG Global Economics said they expect the pace of the tightening to slow down, with two more 0.25 percentage point hikes, one in November and another in January next year.
The Japanese yen declined to a 24-year low against the U.S. dollar to 146 yen-levels, raising expectations of an intervention to prop up the yen following one such move in September. The dollar was trading at 146.31 Japanese yen, up from 145.80 yen. The euro cost 97.08 cents, inching up from 97.07 yen.
The weaker yen raises costs for both consumers and businesses who rely on imports of food, fuel, and other needs, but the bigger purchasing power for foreign currencies is expected to boost tourism. Japan reopened fully to individual tourist travel this week after being closed for more than two years because of the pandemic.
Japan’s benchmark Nikkei 225 was virtually unchanged, losing 4 points to finish at 26,396.83. Australia’s S&P/ASX 200 was up 2.5 points to 6,647.50. Hong Kong’s Hang Seng slipped 0.8 percent to 16,700.31, while the Shanghai Composite climbed 1.5 percent to 3,025.51.
Recession fears are weighing on markets as stubbornly hot inflation leads consumers to temper their spending.
Wall Street is closely watching the Federal Reserve as it continues to aggressively raise its benchmark interest rate to make borrowing more expensive, a strategy that carries the risk of slowing the U.S. economy too much and pushing it into a recession.
The Fed will release minutes from its last meeting on Wednesday, possibly giving Wall Street more insight into its views on inflation and next steps.
Investors still expect the Fed to raise its overnight rate by three-quarters of a percentage point next month, the fourth such increase. That’s triple the usual amount, and would bring the rate up to a range of 3.75 percent to 4 percent. It started the year at virtually zero.
The government will also release its report on wholesale prices Wednesday, providing an update on how inflation is hitting businesses. The closely watched report on consumer prices will be released on Thursday and a report on retail sales is due Friday.
Also coming up is a fresh set of corporate earnings, which could provide a clearer picture of inflation’s impact. Among the companies reporting quarterly results this week: PepsiCo., Delta Air Lines, and Domino’s Pizza. Banks, including Citigroup and JPMorgan Chase, will also report results.
In energy trading, benchmark U.S. crude rose 2 cents to $89.37 a barrel in electronic trading on the New York Mercantile Exchange. U.S. crude oil prices fell 2 percent Tuesday. Brent crude, the international pricing standard, rose 14 cents to $94.43 a barrel.
