Stock market today: Asian markets mixed after US rate hike

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The foreign exchange dealing room at the KEB Hana Bank's headquarters in Seoul, South Korea on Thursday, May 4, 202023, shows a currency trader working near screens that show the Korea Composite Stock Price Index, (KOSPI), and the exchange rate between the U.S. Dollar and South Korean Won, top right. Asian stock markets were mixed on Thursday, after the Federal Reserve increased its benchmark lending rate to cool inflation.

Ahn Young-joon/AP

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At the KEB Hana Bank's headquarters in Seoul, South Korea on Thursday, May 4, the currency traders are seated at monitors next to screens that show the Korea Composite Stock Price Index, (KOSPI), and the foreign exchange rates between the U.S. Dollar and South Korean Won, (top right), as well as the Korea Composite Stock Price Index. Asian stock markets were mixed on Thursday, after the Federal Reserve increased its benchmark lending rate to cool inflation.

Ahn Young-joon/AP

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A currency trader is seen at the KEB Hana Bank's foreign exchange dealing rooms in Seoul, South Korea on Thursday, May 4,2023. Asian stock markets were mixed on Thursday, after the Federal Reserve increased its benchmark lending rate to cool inflation.

Ahn Young-joon/AP

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A currency trader monitors the screens in the foreign exchange dealing rooms of the KEB Hana Bank's headquarters in Seoul, South Korea on Thursday, May 4,2023. Asian stock markets were mixed on Thursday, after the Federal Reserve increased its benchmark lending rate to cool inflation.

Ahn Young-joon/AP

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Federal Reserve Chairman Jerome Powell addresses a press conference following the Federal Open Market Committee's meeting in Washington on Wednesday, May 3, 2020.

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The Asian stock markets on Thursday were mixed after the Federal Reserve increased its benchmark lending rate to cool inflation, and stated that it was not sure what might come next.

Shanghai and Hong Kong made progress, while Sydney and Seoul slipped back. The Japanese markets were closed on a public holiday.

The benchmark S&P 500 index on Wall Street fell by 0.7% after the Fed announced an increase of 0.25 percentage points in its lending rate. The Fed's announcement dropped the reference to "additional policies firming" but did not declare an end to rate increases.

In a recent report, Kristina Hooper of Invesco said, 'I think the key takeaway is that I believe we are at or near the end of this rate-hike cycle.'

The Hang Seng Index in Hong Kong jumped 1.1% to 19,924.15 and the Shanghai Composite Index rose by 0.5% to 3,340.28.

The Kospi in Seoul fell by 0.3%, to 2,494.80. In Sydney, the S&P ASX 200 dropped by 0.2% to 7,183.20. New Zealand and Southeast Asian stock markets declined as well.

The S&P 500 dropped to 4,090.75 on Wall Street. The Dow Jones Industrial Average fell 0.8% to 33 414.24 and the Nasdaq Composite dropped 0.5% to 12 025.33.

The Fed, as well as other central banks from Europe and Asia, are trying to reduce inflation which was at multi-decade levels.

Three high-profile bank collapses in the United States, and one in Switzerland have heightened jitters. The failures were blamed on higher interest rates. Central banks have pledged to take steps, including additional lending if necessary, to reassure investors.

The Fed is expected to cut rates this year in order to boost the economy's slowing growth.

Jerome Powell, Fed chair, said on Thursday that he does not expect any rate cuts in the near future.

Traders are concerned that industry turmoil could lead banks to cut lending, putting downward pressure on the economy. Powell talked about a survey which is still to be released, and will reveal how much bank loan officers say they tighten lending standards.

After a steep drop in price, shares of PacWest Bancorp (formerly Western Alliance Bancorp) and other rivals dropped again the next day. Western Alliance dropped 4.4%.

PacWest fell 2% in trading after hours, after having risen earlier in the day. The lender and others with similar deposits have large amounts that are not insured -- those over $250,000. These deposits have grown to be a bigger liability as wealthy and rich clients are willing to withdraw their money at the first sign trouble.

Banks are also exposed to low interest loans, which are worth less now on the market because they were originally underwritten at a time when rates of interest were lower.

Eli Lilly rose 6.7%, after it reported encouraging results of a study on a treatment for Alzheimer’s disease. Kraft Heinz rose 2% following a profit and revenue beat by analysts.

The latest U.S. reporting season has been better than expected, but is still expected to show declines.

Advanced Micro Devices' shares fell by 9.2%, despite reporting a higher profit and revenue. It provided a revenue forecast for the current quarter which fell short of expectations from some analysts.

According to a report released on Wednesday, the job market might be better than expected. ADP reported that hiring by private employers increased much more than expected last month. This could lead to higher expectations for Friday's federal hiring report.

On the New York Mercantile Exchange, electronic trading saw benchmark U.S. Crude rise 30 cents per barrel to $68.90. On Wednesday, the contract fell $3.06 to $68.60. Brent crude, which is the basis for international oil trade, rose 45 cents in London to $72.78 a barrel. The previous session, it fell $2.99 to $72.33.

The dollar dropped to 134.47 from 135.46 on Wednesday. The euro increased to $1.1085, up from $1.1058.