Asian equity markets were mixed ahead of the US inflation update

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Stock markets were mixed on Tuesday ahead of a US inflation update that traders hope will encourage the Federal Reserve to ease plans for further rate hikes.

Shanghai and Tokyo rose. Hong Kong and Sydney withdrew. Oil prices fell.

Traders fear that repeated rate hikes by the Fed and other central banks to cool inflation, which is at multi-decade highs, could plunge the world into recession. They hope Thursday’s US consumer price report will show a moderation in inflation, reducing the need for a further slowdown in economic activity.

“Traders are bringing back talk of a ‘soft landing’ that could support risk stocks,” ActivTrades’ Anderson Alves said in a report. If data shows lower US inflation, “another moderate wave could hit markets,” helped by “easing recession fears.”

The Shanghai Composite Index was up 0.4% to 3,170.40, while Hong Kong’s Hang Seng was down 0.3% to 21,316.0. The Nikkei 225 in Tokyo rose 0.7% to 26,156.22.

Seoul’s Kospi was down 0.1% to 2,347.50 and Sydney’s S&P ASX 200 was down 0.4% to 7,126.50.

India’s Sensex opened up 0.7% to 60,326.71. New Zealand rose while Southeast Asian markets declined.

On Wall Street, the benchmark S&P 500 fell 0.1% to 3,982.09. The Dow Jones Industrial Average was down 0.3% to 33,517.65, while the Nasdaq Composite was up 0.6% to 10,635.65.

Despite traders’ optimism, Fed officials say interest rates need to stay high for an extended period to end upward pressure on prices. The Fed’s benchmark interest rate is in a range of 4.25% to 4.50%, up from almost zero a year ago.

On Monday, a member of the Fed’s policymaking committee, Mary Daly and Rafael Bostic, dampened hopes of a rate cut this year. Daly said she expects the benchmark to be raised above 5%. Bostic said it will be kept there “for a long time.”

Forecasts expect Thursday’s report to show inflation slowing to 6.5% in December from 7.1% in November. That’s down from the 9.1% peak in June, but well above the Fed’s 2% target.

Warnings of seemingly lackluster corporate earnings are also coming as earnings season kicks off on Friday as companies grapple with higher labor and other costs.

In energy markets, the benchmark US crude oil lost 44 cents to $74.19 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 86 cents on Monday to $74.63. Brent crude, the price basis for international oil trading, fell 52 cents to $79.13 a barrel in London. It rose $1.08 to $79.65 in the previous session.

The dollar rose to 131.96 yen from 131.56 yen on Monday. The euro fell from $1.0750 to $1.0733.