## Asian Stocks Decline Amidst Fed Rate Cut Uncertainty
Asian shares mostly declined on Friday after a U.S. Federal Reserve official suggested the central bank might not deliver any of the interest rate cuts that Wall Street had been expecting this year. This news sparked concerns about inflation and led to a sell-off in global markets.
Japan's benchmark Nikkei 225 dove 2.4%, while Australia's S&P/ASX 200 slipped 0.8%. South Korea's Kospi dropped nearly 1.0%, and Hong Kong's Hang Seng lost 0.8%.
The decline in Asian markets followed a similar trend on Wall Street, where the S&P 500 dropped 1.2% for its worst day in seven weeks. The Dow Jones Industrial Average swung 530 points lower, or 1.4%, after reversing a rise of nearly 300 points. The Nasdaq composite fell 1.4%.
The market's reaction was triggered by comments from Minneapolis Fed President Neel Kashkari, who said he was questioning the need to cut rates, as many areas of the economy looked to be solid despite high interest rates. He had earlier penciled in two cuts to interest rates this year, but now believes that may not be necessary if inflation continues to move sideways.
Kashkari's remarks cut at one of the main propellants that drove the U.S. stock market up more than 20% from November into March. Lower rates boost prices for investments, while easing the pressure on the economy.
Traders had already drastically scaled back their predictions for how many cuts to interest rates the Federal Reserve would deliver this year, down from six at the start of the year to three more recently. However, Kashkari's comments further dampened expectations for rate cuts, leading to the sell-off in markets.
The market remains highly sensitive to any indication that the data-dependent Fed may need to curtail a rate easing cycle this year, according to Quincy Krosby, chief global strategist for LPL Financial.
Investors are now looking to the U.S. jobs report coming Friday for further clues about the Fed's policy direction. The report is expected to show a cooldown in hiring for March, which could ease concerns about inflation and support the case for rate cuts. However, a stronger-than-expected report could reignite fears of inflation and lead to further market volatility.