Asian Stocks Fall on Mixed Fed Signals, Oil Gains: Markets Wrap

(Bloomberg) — Asian stocks fell for the first time in three days after Wall Street shares retreated, with mixed signals from Federal Reserve policymakers clouding the outlook for interest-rate cuts.

The MSCI Asia Pacific Index dropped 0.2% with declines in Japan, which returned after a holiday, and Australia. Shares rose in Hong Kong, where markets remain open even as the city was slammed by Super Typhoon Ragasa. Alibaba Group Holding Ltd. jumped 5.6% after vowing to increase investments in AI. Trading volume in Hong Kong’s benchmark index was about 30% below the average in the last 30 sessions in early trading.

Oil rose as President Donald Trump ramped up his rhetoric against Russia. Treasuries held their gains as Fed Chair Jerome Powell warned of persistent risks in the labor market and inflation, while reiterating that policymakers face a difficult path in weighing further easing.

“Powell doesn’t want to antagonize the White House but he’s not rolling over either,” said David Russell at TradeStation. “He’s keeping his options open in case price pressures increase. Powell’s not trying to sound hawkish, but he’s trying to dodge some of the forceful demand for aggressive cuts.”

Global stocks ran up this year as worries over Trump’s tariff war receded and investors speculated the Fed would cut interest rates further. The Fed slashed its benchmark rate by a quarter percentage point last week and penciled in two more reductions this year, following months of intense pressure from the White House to slash borrowing costs.

In the US, some policymakers were becoming more concerned about growing risks to the labor market, while others remain primarily worried about the possibility that above-target inflation could be pushed higher by tariffs and other policies.

Fed Governor Michelle Bowman said officials need to act decisively to bring down rates as the labor market weakens. Fed Bank of Atlanta President Raphael Bostic said he sees more inflation coming, echoing remarks from his Chicago counterpart Austan Goolsbee.

Meanwhile, Super Typhoon Ragasa lashed Hong Kong in what could be the city’s most powerful storm in seven years. The city’s bankers and traders hunkered down at home or booked hotels near the office as trading got underway.

In geopolitical news, Trump struck a more sympathetic tone on Ukraine’s chances of winning the war and said NATO nations should shoot down Russian aircraft that violated their airspace. Asian defense stocks such as Hanwha Aerospace rose.

Oil extended its gains on mounting risks to Russian supply, including strikes by Ukraine on energy infrastructure and heightened tensions with NATO. Brent rose toward $68 a barrel after gaining 1.6% on Tuesday. Russia also mulled restrictions on diesel exports for some companies.

Meantime, a gauge of Australia’s monthly inflation accelerated in August to the top of the central bank’s target, supporting the case for rates to remain on hold. The currency rose and the policy-sensitive three-year government bond yields climbed as traders pared expectations for the next rate cut.

Elsewhere, New Zealand named Anna Breman, currently First Deputy Governor of Sweden’s Riksbank, as the new governor of its central bank. Breman is the first woman named to head the RBNZ.

Corporate News:

Micron Technology Inc., the largest US maker of computer memory chips, gave an upbeat forecast for the current quarter, helped by demand for artificial intelligence equipment. President Donald Trump created a potentially existential crisis for Tylenol maker Kenvue Inc. with just three words about the company’s most-recognized product: “don’t take it.” JD.com and Meituan’s shares rise after CCTV reported that the government wants to push for fair competition among food delivery firms. Cathie Wood’s funds reopened positions in Alibaba Group Holding Ltd. for the first time in four years, just as the stock rallied to a multiyear high on optimism over the Chinese firm’s push in artificial intelligence. Zijin Gold International Co. delayed its $3.2 billion listing after Super Typhoon Ragasa slammed Hong Kong. Tether Holdings SA, issuer of the world’s largest stablecoin, is in talks with investors to raise as much as $20 billion. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 11:47 a.m. Tokyo time Japan’s Topix fell 0.2% Australia’s S&P/ASX 200 fell 0.9% Hong Kong’s Hang Seng rose 0.3% The Shanghai Composite was little changed Euro Stoxx 50 futures fell 0.4% Currencies

The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1798 The Japanese yen was little changed at 147.76 per dollar The offshore yuan was little changed at 7.1188 per dollar Cryptocurrencies

Bitcoin rose 0.2% to $112,252.39 Ether fell 0.2% to $4,170.99 Bonds

The yield on 10-year Treasuries was little changed at 4.11% Japan’s 10-year yield was little changed at 1.645% Australia’s 10-year yield advanced four basis points to 4.30% Commodities

West Texas Intermediate crude rose 0.3% to $63.58 a barrel Spot gold fell 0.2% to $3,756.75 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck and Abhishek Vishnoi.

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