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TOKYO (AP) — Asian shares were trading mixed Thursday following a retreat on Wall Street after the Federal Reserve chair made comments that indicated inflation still isn't under control.
Japan's benchmark Nikkei 225 was flat at 33,575.63. Australia's S&P/ASX 200 declined 1.6% to 7,196.10. South Korea's Kospi gained 0.4% to 2,593.20. Trading was closed in Hong Kong and Shanghai for Dragon Boat Festival, a national holiday.
Shares rose in India.
The Chinese markets being closed brought a break from jitters about possible renewed tensions in the U.S.-China relationship after President Joe Biden referred to Chinese President Xi Jinping as a dictator.
That pushed “back against the idea that the U.S.-China relationship could be warming with Secretary of State Antony Blinken’s visit,” said Yeap Jun Rong, market analyst at IG.
Blinken was in Beijing recently where both sides agreed to “stabilize” badly deteriorated ties. But Blinken said China was not ready to resume military-to-military contacts.
Fitch Ratings said in its June Global Economic Outlook that the global growth outlook for next year has deteriorated, given the prospects of higher interest rates around the world.
“Global growth is showing near-term resilience but with core inflation remaining stubbornly high, central banks will have to continue tightening policy in the coming months," it said.
On Wall Street, declines in technology stocks left benchmarks mixed and sapped more momentum from a five-week rally. The S&P 500 fell 0.5% to 4,365.69. It was a third straight pullback for the index after it rallied last week to its highest level in more than a year.
Weakness for high-growth stocks hit the Nasdaq composite in particular, and it lost 1.2% to 13,502.20. Still, roughly as many stocks rose as fell on Wall Street, and the Dow Jones Industrial Average dropped by a milder 0.3%, to 33,951.52.
Wall Street had been on a tear this year, with the S&P 500 up nearly 14% amid hopes that inflation is coming down quickly enough for the Federal Reserve to stop hiking interest rates soon. That would take pressure off the economy and could allow it to avoid a recession. Some analysts say the rally ran too far, too fast while inflation has remained stubbornly high, which could force the Fed to keep rates higher for longer.
Fed Chair Jerome Powell said Wednesday that "the process of getting inflation back down to 2% has a long way to go.” He said again that a couple more rate increases may be on the way, though the speed of the hikes is likely to slow after moving at a furious speed since early last year.