Stock market today: Asia up, Europe lower after US rate hike

Asian stocks rose Thursday while European markets opened lower after the Federal Reserve raised its benchmark lending rate again to cool inflation and said it wasnt sure what may come next.Shanghai, Hong Kong and Wall Street futures advanced.

Asian stocks rose Thursday while European markets opened lower after the Federal Reserve raised its benchmark lending rate again to cool inflation and said it wasn't sure what may come next.

Shanghai, Hong Kong and Wall Street futures advanced. London and Frankfurt declined. Japanese markets were closed for a holiday.

Wall Street's benchmark S&P 500 index fell 0.7 per cent on Wednesday after the Fed announced a 0.25 percentage point increase in its lending rate. The Fed dropped a reference to "additional policy firming" in its statement but stopped short of declaring an end to rate hikes.

"The key takeaway, in my view, is that we are likely at or very near the end of the rate hike cycle," Kristina Hooper of Invesco said in a report.

In early trading, the FTSE 100 in London lost 0.2 per cent to 7,773.89. Frankfurt's DAX shed 0.2 per cent to 15,783.66 and the CAC 40 in Paris retreated 0.2 per cent to 7,389.89.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were up 0.1 per cent.

On Wednesday, the Dow fell 0.8 per cent and the Nasdaq composite slipped 0.5 per cent.

In Asia, the Shanghai Composite Index rose 0.8 per cent to 3,350.45 as trading resumed following a holiday. The Hang Seng in Hong Kong surged 1.4 per cent to 19,969.40.

The Kospi in Seoul lost less than 0.1 per cent to 2,500.94 and Sydney's S&P-ASX 200 fell less than 0.1 per cent to 7,193.10.

India's Sensex gained 0.5 per cent to 61,500.18. New Zealand and Southeast Asian markets advanced.

Traders expect a US recession this year as the Fed and other central banks in Europe and Asia try to extinguish inflation that was near multi-decade highs.

Jitters increased after three high-profile bank failures in the United States and one in Switzerland blamed on strain from higher interest rates. Central banks have tried to reassure investors by pledging steps including additional lending if needed.

Traders expect the Fed to start cutting rates as early as this year to prop up weakening economic growth.

On Thursday, Fed Chair Jerome Powell said he doesn't expect rate cuts that soon.

Still, data from CME Group indicates traders see an 89 per cent changes of a cut of 0.25 percentage points at the Fed's September meeting.

Traders worry industry turmoil might prompt banks to reduce lending, worsening downward pressure on economic activity. Powell mentioned a survey that is yet to be released and will show how much loan officers at banks say they are tightening lending standards.

Shares of PacWest Bancorp, Western Alliance Bancorp and other rivals fell again a day after trading was halted following steep price slides. Western Alliance fell 4.4 per cent.

PacWest sank 2 per cent after being up earlier in the day but plunged another 52.5 per cent in after-hours trading. It and other similar lenders have large amounts of uninsured deposits — those above USD 250,000 — which have become a larger liability because depositors have shown themselves willing to pull their money out at the first sign of trouble.

The banks are also exposed to low-interest loans that are now worth less on the open market due to the fact they were underwritten when interest rates were substantially lower.

On the opposite end was Eli Lilly, which rose 6.7 per cent after reporting encouraging results from a study of a treatment for Alzheimer's disease. Kraft Heinz rallied 2 per cent after beating analysts' forecasts for profit and revenue.

Profits for most US companies during the latest reporting season are better than feared but are expected to reflect declines.

Advanced Micro Devices fell 9.2 per cent despite reporting stronger profit and revenue than expected. It gave a forecast for revenue in the current quarter that fell short of some analysts' expectations.

A report Wednesday suggested the job market may be in better shape than expected. ADP, a payroll processor, said hiring by private employers accelerated much more last month than forecast. That could raise expectations for the federal government's hiring report on Friday.

In energy markets, benchmark US crude advanced 34 cents to USD 68.94 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged USD 3.06 on Wednesday to USD 68.60. Brent crude, the price basis for international oil trading, gained 60 cents to USD 72.93 per barrel in London. It fell USD 2.99 the previous session to USD 72.33.

The dollar fell to 134.74 yen from Wednesday's 135.46 yen. The euro edged down to USD 1.1056 from USD 1.1058.