Asian Shares Mixed In Cautious Trading

Asian stocks ended mixed on Wednesday as investors grappled with the impact of higher interest rates on economic growth.

Profits at Chinese industrial firms posted a surprise surge of 17.2 percent in August from a year earlier, pointing to signs of economic recovery in the world’s second-largest economy.

Gains in Australian inflation for August matched expectations, adding to the case for a pause in rate hikes next month.

The dollar index steadied near 10-month highs and the yen held weak at 149 per dollar after reports that the Japanese government is putting together a stimulus package to cushion inflation’s rise and boost growth.

Gold hit over a one-month low on interest rate worries, while oil prices rose on worries about tight supply.

China’s Shanghai Composite Index edged up 0.2 percent to 3,107.32 as signs that the economy is stabilizing lifted sentiment ahead of the long holiday weekend.

Hong Kong’s Hang Seng Index climbed 0.8 percent to 17,611.87. Mainland Chinese markets will be closed from September 29 to October 6.

China Evergrande Group plummeted 19 percent in Hong Kong following an unconfirmed report that its chairman was placed under police surveillance.

Shares of Country Garden Holdings, another debt-encumbered developer, fell 2.2 percent.

Japanese markets eked out modest gains after the government retained its economic view of a modest recovery in the world’s third-largest economy.

The Nikkei 225 Index recouped early losses to settle 0.2 percent higher at 32,371.90, while the broader Topix Index closed up 0.3 percent at 2,379.53.

Pharma stocks such as Chugai Pharmaceutical and Daiichi Sankyo surged around 4 percent each, while tech stocks such as Advantest, Tokyo Electron and Screen Holdings rose 1-2 percent. Heavyweight Fast Retailing declined 1.5 percent.

Seoul stocks ended little changed, with the Kospi recovering from an early slide to finish marginally higher at 2,465.07 ahead of a long holiday weekend.

South Korea’s stock, ETF, derivatives and commodity markets will be closed during the extended Chuseok holiday from Thursday through October 3.

Australian markets slipped after data showed inflation accelerated in August, driven by a surge in fuel prices.

The annual rate of consumer price inflation picked up to 5.2 percent from 4.9 percent, coming in line with expectations.

The benchmark S&P/ASX 200 Index dipped 0.1 percent to 7,030.30, while the broader All Ordinaries Index ended down 0.1 percent at 7,229.80.

Star Entertainment Group shares plummeted 16 percent as trading resumed after a discounted A$750 million ($479.63 million) equity raising.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index dropped 0.2 percent to 11,316.81.

U.S. stocks pulled back sharply overnight to reach their lowest closing levels in over three months on uncertainty about the Fed’s rate path and worries over a possible government shutdown.

In economic releases, a measure of consumer confidence hit a four-month low in September and sales of newly built homes fell in August – raising fears that the world’s largest economy could be headed for a recession.

In an interview with the Times of India, JPMorgan CEO Jamie Dimon warned investors to prepare for a worst-case scenario where the Fed lifts rates to 7 percent alongside stagflation.

Minneapolis Federal Reserve President Neel Kashkari also wrote in an essay that there is a 40 percent chance the Federal Reserve will have to push rates “meaningfully higher” to combat stubborn services inflation.

The S&P 500 plummeted 1.5 percent to close below 4,300 for the first time since June 9, while the Dow gave up 1.1 percent and the tech-heavy Nasdaq Composite plunged 1.6 percent.

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