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Asia stock markets mixed after Wall Street drops

Wall Street drops

Shanghai Composite Index added 0.2% to 3,587.69, Hang Seng gained 0.9% to 23,702.90, Kospi shed 1.2% to 2,919.46 and Sydney’s S&P ASX 200 declined 0.1% to 7,444.70

Asian stock markets were mixed Monday after Wall Street dropped on concerns the Federal Reserve will raise interest rates as soon as March.

Shanghai and Hong Kong gained. Seoul and Sydney fell. Japanese markets were closed for a holiday.

Investors were rattled last week after notes from the latest Fed meeting showed officials thought the U.S. job market is healthy enough that it might no longer need ultra-low interest rates and other stimulus.

That was reinforced by U.S. employment numbers Friday that showed stronger-than-expected wages, though with only about half as much hiring as forecast.

The prospect of earlier rate hikes suggests that markets could continue to be roiled by volatility, Tan Boon Heng of Mizuho Bank said in a report.

The Shanghai Composite Index added 0.2% to 3,587.69 and the Hang Seng in Hong Kong gained 0.9% to 23,702.90.

The Kospi in Seoul shed 1.2% to 2,919.46 and Sydney’s S&P ASX 200 declined 0.1% to 7,444.70.

Investors were cautious after Fed officials said in December that plans to roll back ultra-low rates and other economic stimulus that has boosted share prices might be accelerated to cool U.S. inflation now at a four-decade high.

On Friday, Wall Street’s benchmark S&P 500 index lost 0.4% to 4,677.03, or nearly 2.5% below Jan. 3′s record high.

The Dow Jones Industrial Average (DJIA) dropped less than 0.1% to 36,231.66. The Nasdaq composite shed 1% to 14,935.90.

Investors are pricing a better than 79% probability that the Fed will raise short-term rates in March. A month ago, they saw less than 39% of a chance of that, according to CME Group.

Record-low interest rates have helped to boost stock prices despite bouts of unease about the coronavirus pandemic.

The Fed already has slowed bond purchases that were pumping money into the financial system to push down commercial lending rates. Notes from its December meeting indicated Fed officials might look to cut off such purchases more quickly than previously planned.

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