Asian shares dip despite Wall St rally; eyes on Fed chair

TOKYO (AP) — Asian shares declined Wednesday as markets shrugged off a Wall Street rally and awaited congressional testimony by Federal Reserve Chair Jerome Powell.

Japan’s benchmark Nikkei 225 shed 0.4% to finish at 26,149.55. Australia’s S&P/ASX 200 lost 0.2% to 6,508.50. South Korea’s Kospi tumbled 2.7% to 2,342.81. Hong Kong’s Hang Seng dropped nearly 2.0% to 21,132.42, while the Shanghai Composite sank 1.1% to 3,269.63.

Stocks have been mostly sliding in recent weeks as investors adjust to higher interest rates that the Federal Reserve and other central banks are increasingly doling out to temper record-high inflation. Investors are worried that the Fed risks slowing economic growth too much and bringing on a recession.

The overnight rally on Wall Street “will be taken with a pinch of salt as elevated inflation and risks to growth persist,” Venkateswaran Lavanya at Mizuho Bank said.

The Wall Street rally that started the holiday-shortened week came as investors look ahead to what Jerome Powell will tell Congress on Wednesday, the first of two days of testimony as part of the central bank’s semi-annual monetary policy report.

“For now, the fundamental catalyst for a more sustained rebound seems fragile, with all eyes on Fed Chair Jerome Powell’s testimony ahead to further drive expectations of policy outlook and inflation,” Yeap Jun Rong, market strategist at IG in Singapore, said in a commentary.

The worries over inflation and interest rates have been worsened by a spike in energy prices following Russia's invasion of Ukraine. The price of U.S. crude oil is up about 52% for the year. That has taken a bigger bite out of people's wallets at the gas pump and is prompting a slowdown in spending elsewhere.

Oil prices fell back on Wednesday, with benchmark U.S....