Investing.com - Asian shares were mixed on Friday and mostly lower after Fed Chair Janet Yellen said that an interest rate hike this year is still very much on the cards.
The Hang Seng index was down 0.17%, while the Shanghai Composite added 0.86% ad the S&P/ASX 200 eased 0.47%. The Nikkei 225 was down 0.06%.
Yellen said she anticipates that it will be appropriate to raise short-term interest rates by the end of the year.
In prepared remarks for a speech at the University of Massachussetts-Amherst, Yellen emphasized that most of her colleagues will likely support raising the target range for the Federal Funds Rate at some point this year. Yellen's stance represents a stark contrast from her position last week when the FOMC only disclosed that 13 of 17 of its members were in favor of raising rates this year. Yellen had not personally associated herself with a rate hike since July.
Following the FOMC's July meeting, China rattled global markets by devaluing the yuan in an effort to stimulate its flagging economy. Earlier this week, a preliminary reading of China's factory activity in September slumped to its lowest level in more than six years.
In Asia, national cored CPI in Japan for August fell 0.1% year-on-year, matching expectations, while the corporate services price index rose 0.7%, better than the 0.5% gain seen.
Japan lowered its assessment of the current economic climate for the first time since October last year, with an official saying Friday rising corporate profits have failed to revive inanimate consumption and business investment, reports say.
For near-term growth prospects, the government repeated its warning about sluggish growth in Asian emerging market economies caused by the recent Chinese slowdown.
In its monthly report for September, the government continued to say the domestic economy is on a "moderate recovery" trend but noted it has some soft spots: consumer spending is sluggish, exports are weak and business sentiment is flat.
In an unprecedented move, the government declined to say officially in its report whether it is downgrading its view.
But Yutaka Murayama, director of macro-economic analysis at the Cabinet Office, told reporters the overall judgment is "weaker than last month" and "closer to a downgrade." He said he would not deny it is a "de facto downgrade."
"The slowness in some areas we noted in the report refers to the disappointing pace of improvement in the positive economic growth mechanism as seen in consumption and business investment," Murayama said. But he added that the expression "slowness" is less negative than the term "weakness" used last year to describe the slump caused by the April 2014 sales tax hike.
Overnight, U.S. stocks rallied late in Thursday's session amid hopes that Federal Reserve chair Janet Yellen could strike a dovish tone in an appearance after the close of trading, but still closed slightly lower on a volatile day of trading.
Earlier, the Dow Jones Industrial Average fell as much as 263 points as weakening health care stocks and a massive sell-off in Caterpillar Inc (NYSE:NYSE:CAT) weighed on all three major indices. On Thursday morning, Caterpillar, the world's largest construction and mining equipment maker, announced that it is cutting its revenue forecast and slashing up to 10,000 jobs, amid continuing softness in the energy and mining sectors worldwide. Caterpillar lowered its full-year revenue outlook to $48 billion for 2015, below analysts' forecasts for sales of $48.82 billion.
The Dow fell 78.57 or 0.48% to 16,201.32 for its fifth loss in the last six sessions, while the NASDAQ Composite index lost 18.26 or 0.38% to close at 4,734.48. The S&P Composite index, meanwhile, dipped 6.52 or 0.34% to 1,932.24, as five of 10 sectors closed in the red. Stocks in the Health Care, Industrials and Financials sectors lagged, while stocks in the Utilities, Energy and Consumer Goods industries led.