Asian Shares Pare Gains To End Mixed

Asian stocks gave up early gains to end mixed on Thursday amid concerns that higher U.S. interest rates could lead to more capital outflows from emerging markets. Investors also continued to fret about the impact of surging inflation on economic growth and corporate earnings.

After retreating from a 20-year peak, the dollar regained its footing in the Asian session. Gold inched lower, while oil prices recovered some ground after a steep drop in the previous session.

China’s Shanghai Composite Index ended 0.6 percent lower at 3,285.38, giving up early gains. Hong Kong’s Hang Seng Index tumbled 2.2 percent to 20,845.43 following the Fed’s aggressive but expected 75-bps rate hike.

Hong Kong’s financial secretary and de facto central banker both said the city’s banking system has enough liquidity even if they brace for capital outflows.

Japanese shares eked out modest gains, led by consumer cyclicals. Sony, Fast Retailing and Toyota Motor rallied 1-3 percent.

The Nikkei 225 Index rose 0.4 percent to 26,431.20, snapping a four-day losing streak ahead of Friday’s BoJ meeting, where the central bank is expected to stick with all its main policy settings. The broader Topix closed 0.6 percent higher at 1,867.81.

Japan posted its biggest trade deficit in more than eight years for May as high commodity prices and declines in the yen swelled imports, data showed earlier today.

Seoul stocks snapped a seven-day losing streak, though overall gains remained modest due to rising macro uncertainties. The Kospi inched up 0.2 percent to 2,451.41, with tech and chemical stocks pacing the gainers. LG Chem and Samsung SDI both jumped around 4 percent.

Finance Minister Choo Kyung-ho pointed to fears over growing market volatility and a global economic slowdown amid accelerating monetary tightening, vowing responses “with a sense of urgency.”

Australian markets gave up early gains to end slightly lower as recession worries overshadowed solid labor market data. The nation’s jobless rate remained steady at 3.9 percent last month with a better-than-expected 60,600 jobs added to the economy.

The benchmark S&P/ASX 200 Index slipped 0.2 percent to 6,591.10, extending losses for a fifth straight session. The broader All Ordinaries Index finished marginally lower at 6,783.70.

Healthcare stocks led losses, with heavyweights CSL and Ramsay Health Care both falling 0.9 percent and 1.4 percent, respectively.

Link Administration slumped 10.4 percent after the competition regulator flagged concerns about Canadian firm Dye & Durham’s proposed US$2.48 billion deal to buy the share registry company.

New Zealand shares rose slightly, with the benchmark S&P/NZX 50 Index ending up 0.1 percent at 10,646.58 after data showed the nation’s economy contracted marginally in the first quarter of the year.

U.S. stocks rallied overnight as the Fed intensified its drive to tame high inflation through interest-rate increases and balance sheet reduction.

After raising the target interest rate by 75 basis points – the biggest increase since 1994 – and cutting its growth projection, the Fed suggested that “unusually large” moves of that scale likely wouldn’t become common.

Fed Chair Jerome Powell said he expected either a 0.50 percentage point or 0.75 percentage point increase at the Fed’s July meeting.

The S&P 500 added 1.5 percent to snap a five-day losing streak despite weak retail sales, New York factory activity and housing data. The Dow gained 1 percent and the tech-heavy Nasdaq Composite jumped 2.5 percent.

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