TOKYO — Asian shares traded mostly lower on Wednesday after an overnight decline on Wall Street, while Tokyo’s main benchmark temporarily hit another 30-year high.
The Japanese benchmark Nikkei 225 gained 0.2% to 35,701.41 in afternoon trading. The Nikkei has hit new 34-year highs, or its best since February 1990 during the so-called financial “bubble.” The purchases focused on semiconductor-related stocks, and a cheap yen, helped exacerbate export problems.
The Australian S&The P/ASX 200 fell 0.3% to 7,393.10. South Korea’s Kospi fell 2.0% to 2,447.09. The Hang Seng in Hong Kong fell almost 3.1% to 15,381.84. The Shanghai Composite lost 0.9% to 2,868.96.
Official Chinese data released Wednesday showed China’s economy grew 5.2% in 2023, surpassing the government’s target of “about 5%.” That growth was likely helped by GDP of just 3% in 2022, as China’s economy slowed due to COVID-19 and nationwide lockdowns during the pandemic.
Investors were keeping an eye on upcoming earnings reports, as well as possible moves from the world’s central banks, to gauge their next moves.
Wall Street had a lackluster return to trading after a three-day holiday weekend.
The S&The P500 fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average fell 231.86, or 0.6%, to 37,361.12, and the Nasdaq composite fell 28.41, or 0.2%, to 14,944.35.
Spirit Airlines lost 47.1% after a US judge blocked its takeover by JetBlue Airways over fears it would mean higher airfares for fliers. JetBlue rose 4.9%.
Bank stocks, meanwhile, were mixed as the earnings reporting season for the final three months of 2023 gets underway. Morgan Stanley fell 4.2% after it said a legal issue and a special assessment had wiped out $535 million of its pre-tax profits, while Goldman Sachs gained 0.7%. % higher after reporting results that exceeded Wall Street forecasts.
Companies throughout the S&If Wall Street analysts’ predictions are to be believed, the P500 will likely report meager earnings growth for the fourth quarter from a year earlier. Profits have been under pressure for more than a year due to rising costs and high inflation.
But optimism is greater for 2024, where analysts expect strong earnings per share growth of 11.8% for S.&P 500 companies, according to FactSet. That, plus expectations for several Federal Reserve rate cuts this year, have the S&P500 rally to 10 winning weeks in the last 11. The index remains within 0.6% of its all-time high set two years ago
Treasury yields have already fallen in the bond market on expectations of upcoming rate cuts, which traders say could start as early as March. It’s a sharp turnaround from the past few years, when the Federal Reserve dramatically raised interest rates in hopes of bringing high inflation under control.
Easing interest rates and yields eases pressure on the economy and financial system, while also increasing investment prices. And according to Michael Wilson, a strategist at Morgan Stanley, interest rates have been the main force moving the stock market over the past six months.
He sees this dynamic continuing in the short term, with the ‘bond market still calling the shots’.
For the time being, traders foresee many more interest rate cuts until 2024 than the Fed itself has indicated. That raises the potential for big market swings around every speech from a Fed official or economic report.
Bond market yields rose after Fed Governor Christopher Waller said in a speech that “policy has been set correctly” on interest rates. After the speech, traders bet that the Fed’s first rate cut would come in May instead of March.
In energy trading, benchmark U.S. crude lost 59 cents to $71.81 a barrel. Brent crude, the international standard, fell 56 cents to $77.73 a barrel.
In currency trading, the US dollar rose from 147.09 yen to 147.46 Japanese yen. The euro was at $1.0868, down from $1.0880.
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AP Business Writer Stan Choe in New York contributed to this report.
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