Global markets mixed ahead of Fed rate decision

By JOE McDONALD
AP Business Writer

BEIJING (AP) — Global stock markets were mixed on Monday ahead of what is expected to be a move by the Federal Reserve this week to raise interest rates again as investors hope the U.S. central bank will scale back its plans for further increases.

Germany’s DAX gained 0.2% to 13,269.55 and Britain’s FTSE 100 was flat at 7,049.25. In Paris, the CAC 40 lost 0.2% to 6,262.91. The S&P 500 future lost 0.6% while that of the Dow Industrials was down 0.5%.

Wall Street ended last week higher after Apple and other big companies reported strong earnings and a closely watched gauge of inflation picked up pace in September.

The Fed is widely expected at this week’s meeting to announce another rate hike of 0.75 percentage points, three times its usual margin. Investors are looking for signs that officials are confident that past increases imposed to calm inflation, which is nearing a four-decade high, are working and that future increases could be lower.

Investors fear that rate hikes by the Fed and other central banks to calm inflation could tip the global economy into recession. The US central bank raised its benchmark lending rate to a range of 3% to 3.25% from near zero in March.

“Fed Chairman Jerome Powell’s tone will be important” after this week’s meeting, IG’s Yeap Jun Rong said in a report. Investors are looking for “increased concern about economic conditions” instead of the “current direct determination to control inflation”.

In Asian trading, the Nikkei 225 in Tokyo gained 1.8% to 27,587.46 as the government announced retail sales rose in September, although industrial production weakened.

The Shanghai Composite Index fell 0.8% to 2,893.48 after an industry survey showed weakening output and demand. Hong Kong’s Hang Seng fell 1.2% to 14,687.02.

Seoul’s Kospi gained 1.1% to 2,293.61 and Sydney’s S&P-ASX 200 gained 1.2% to 6,863.50.

On Wall Street, the benchmark S&P 500 index rose 2.5% on Friday after US government data showed consumer prices rose 6.2% year on year in early September, or the same rate as the previous month.

The Dow Jones Industrial Average rose 2.6% and the Nasdaq composite climbed 2.9%.

Core inflation, which excludes food and energy price volatility to show the underlying trend, accelerated to 5.1% from 4.9% in August. Powell and other Fed officials have said they are prepared to keep interest rates high until they are sure inflation is extinguished.

Also on Friday, government data showed U.S. workers’ pay increases were in line with expectations. Powell cited wages as a metric the Fed monitors when deciding whether to raise rates.

In energy markets on Monday, benchmark U.S. crude fell 66 cents to $87.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.18 to $87.90 on Friday. Brent crude, used to price international oils, fell 65 cents to $93.12 a barrel in London. It fell $1.19 on Friday to $95.77.

The dollar rose to 148.27 yen from 147.53 yen on Friday. The euro fell slightly to 99.35 cents from 99.55 cents.