Asian Shares Mixed Amid U.S. Government Shutdown Fears

Asian stocks turned in a mixed performance on Friday as concerns persisted about the Federal Reserve’s rate trajectory and the U.S. faced a government shutdown after President-elect Donald Trump abruptly rejected a bipartisan plan.

The dollar held near a two-year high, denting demand for commodities, including oil. Gold ticked higher in Asian trading but was set for a weekly loss after the Federal Reserve signaled a slowdown in the pace of rate cuts.

The U.S. Personal Consumption Expenditure data, the Fed’s preferred inflation measure, due later in the day is expected to play a crucial role in shaping the U.S. central bank’s rate path under the incoming Trump administration.

China’s Shanghai Composite Index fluctuated before finishing marginally lower at 3,368.07 as the People’s Bank of China maintained its benchmark lending rates, defying market predictions for a cut.

The one-year loan prime rate was held at 3.10 percent and the five-year rate at 3.60 percent. Hong Kong’s Hang Seng Index ended 0.2 percent lower at 19,720.70 after a choppy session.

Japanese markets swung between gains and losses before ending modestly lower as data showed the annual inflation rate in Japan climbed to 2.9 percent in November 2024 from 2.3 percent in the prior month, marking the highest reading since October 2023.

The Nikkei 225 Index dipped 0.3 percent to 38,701.90, while the broader Topix Index settled 0.4 percent lower at 2,701.99.

The yen failed to capitalize on a modest intraday bounce after authorities ramped up warnings against excessive currency speculation.

Bank of Japan Governor Kazuo Ueda said Thursday the central bank needs to assess more wage and other data before deciding on an additional rate hike.

In South Korea, the Kospi tumbled 1.3 percent to 2,404.15 amid the double whammy of a stronger dollar and domestic political turmoil.

Australian markets fell sharply, with financials and consumer stocks leading losses. The benchmark S&P/ASX 200 Index dropped 1.2 percent to 8,067, while the broader All Ordinaries Index closed 1.2 percent lower at 8,316.70.

Conglomerate Wesfarmers lost 5 percent after announcing the sale of Coregas to Nippon Sanso for A$770 million.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index jumped 1.2 percent to 12,904.11 amid index changes and late heavy trading.

U.S. stocks ended flat overnight after steep declines in the previous session on the Fed’s hawkish tilt.

Largely positive data reinforced the Fed’s cautious approach to further rate cuts, with weekly initial jobless claims falling more than expected, existing home sales spiking to an eight-month high and Q3 GDP revised to show a 3.1 percent increase from the previously reported 2.8 percent pace.

The Dow inched up marginally after hitting its lowest level in over a month the previous day. The tech-heavy Nasdaq Composite and the S&P 500 ended with a negative bias.