Stock market today: Asian shares mostly fall despite solid signs of U.S. growth
TOKYO — Asian shares were mostly lower on Friday despite positive news on the US economy, with Japan’s benchmark falling after the latest data showed inflation is slowing faster than expected.
Tokyo’s Nikkei 225 fell 1.3% to end at 35,751.07 as a key measure of inflation slowed faster than expected in January to 1.6% from 2.4% in December. Weaker price gains ease pressure on the Bank of Japan to tighten its ultra-lax monetary policy, which has pumped huge amounts of cash into markets. The central bank targets inflation of 2%.
“The BOJ will wait to gauge the underlying trend of the inflation path in the coming months. We expect inflation to rise above 2% again in February,” Robert Carnell, regional head of research for Asia-Pacific at ING, said in a report.
Chinese markets ended a winning streak after a wave of government measures to support stock prices and the real estate sector.
Hong Kong’s Hang Seng fell 1.6% to 15,954.86, while the Shanghai Composite was little changed, rising 0.1% to 2,910.22.
South Korea’s Kospi rose 0.3% to 2,478.56. In Australia the markets were closed for a national holiday.
Thursday on Wall Street, the S&The P500 added 0.4% to 4,894.16, setting a record for the fifth straight day. The Dow Jones Industrial Average rose 0.6% to 38,049.13, and the Nasdaq composite gained 0.2% to 15,510.50.
IBM helped lead the market with a 9.5% gain after reporting better earnings than analysts expected for its latest quarter. Four of the five shares in the S&The P500 rose alongside it, but Tesla kept the market’s gains in check with a 12.1% decline.
The electric vehicle maker reported profits and revenue that fell short of expectations and warned of lower sales growth this year.
Wall Street focused on a report that showed the U.S. economy continues to chug along, overturning last year’s predictions of an impending recession due to high interest rates.
According to an initial estimate by the US government, the economy grew at an annual rate of 3.3% in the last three months of 2023. That was much stronger than the 1.8% growth economists had expected, according to FactSet. Such a resilient economy should boost profits for companies, which is one of the most important factors driving stock prices.
The report also provided encouraging confirmation that inflation continued to moderate at the end of 2023. Hopes are high that inflation has cooled enough from the highs of two summers ago that the Federal Reserve can start cutting rates this year. That would in turn ease pressure on financial markets and boost investment prices.
“The key data is the perfect mix of strong consumption and falling inflation,” said Jamie Cox, managing partner of Harris Financial Group. “This is exactly what you want to see if you run the Fed and want to bring rates down this year.”
A separate report shows more U.S. workers filed for unemployment benefits last week, but the number remains low compared to history and signals a still-resilient labor market.
Government bond yields fell in the bond market due to expectations for interest rate cuts. The yield on the 10-year Treasury note fell to 4.10% from 4.16% before the report was released and from 4.18% at the end of Wednesday. In October this was 5%, the highest level since 2007.
Elsewhere on Wall Street, earnings season continued to gain momentum, with more than two dozen companies in the S&P500 will report their latest results late Wednesday or early Thursday.
American Airlines rose 10.3% after reporting last-quarter earnings that were much stronger than what analysts expected. On the losing side of Wall Street, Humana fell 11.7% after the insurer reported worse-than-expected results for the end of 2023.
In energy trading, U.S. benchmark crude fell 50 cents to $76.86 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 54 cents to $81.42 a barrel.
In currency trading, the US dollar rose from 147.64 yen to 147.85 Japanese yen. The euro was at $1.0817, down from $1.0848.