TOKYO (AP) — Asian shares were trading mostly lower Wednesday after a decline overnight on Wall Street, while Tokyo’s main benchmark momentarily hit another 30-year high.
Japan’s benchmark Nikkei 225
NIY00,
gained 0.9% in morning trading to 35,935.59. The Nikkei has been hitting new 34-year highs, or the best since February 1990 during the so-called financial bubble. Buying focused on semiconductor-related shares, and a cheap yen helped boost exporter issues.
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Australia’s S&P/ASX 200
AU:ASX10000
slipped 0.2% to 7,401.30. South Korea’s Kospi
KR:180721
dropped 1.4% to 2,463.12. Hong Kong’s Hang Seng
HK:HSCI
dove nearly 2% to 15,550.65. The Shanghai Composite
CN:SHCOMP
shed 0.6% to 2,877.44.
Investors were keeping their eyes on upcoming earnings reports, as well as potential moves by the world’s central banks, to gauge their next moves.
Wall Street slipped in a lackluster return to trading following a three-day holiday weekend.
See: What’s next for stocks as ‘tired’ market stalls in 2024 ahead of closely watched retail sales
The S&P 500
SPX
fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average
DJIA
dropped 231.86, or 0.6%, to 37,361.12, and the Nasdaq
COMP
sank 28.41, or 0.2%, to 14,944.35.
Spirit Airlines
SAVE,
lost 47.1% after a U.S. judge blocked its takeover by JetBlue Airways
JBLU,
on concerns it would mean higher airfares for flyers. JetBlue rose 4.9%.
Stocks of banks were mixed, meanwhile, as earnings reporting season ramps up for the final three months of 2023. Morgan Stanley
MS,
sank 4.2% after it said a legal matter and a special assessment knocked $535 million off its pretax earnings, while Goldman Sachs
GS,
edged 0.7% higher after reporting results that topped Wall Street’s forecasts.
Companies across the S&P 500 are likely to report meager growth in profits for the fourth quarter from a year earlier, if any, if Wall Street analysts’ forecasts are to be believed. Earnings have been under pressure for more than a year because of rising costs amid high inflation.
But optimism is higher for 2024, where analysts are forecasting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. That, plus expectations for several cuts to interest rates by the Federal Reserve this year, have helped the S&P 500 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
BX:TMUBMUSD10Y
have already sunk on expectations for upcoming cuts to interest rates, which traders believe could begin as early as March. It’s a sharp turnaround from the past couple years, when the Federal Reserve was hiking rates drastically in hopes of getting high inflation under control.
The Tell: No rate cuts in 2024? Why investors should think about the ‘unthinkable.’
Easier rates and yields relax the pressure on the economy and financial system, while also boosting prices for investments. And for the past six months, interest rates have been the main force moving the stock market, according to Michael Wilson, strategist at Morgan Stanley.
He sees that dynamic continuing in the near term, with the “bond market still in charge.”
For now, traders are penciling in many more cuts to rates through 2024 than the Fed itself has indicated. That raises the potential for big market swings around each speech by a Fed official or economic report.
Yields rose in the bond market after Fed governor Christopher Waller said in a speech that “policy is set properly” on interest rates. Following the speech, traders pushed some bets for the Fed’s first cut to rates to happen in May instead of March.
On Wall Street, Boeing fell to one of the market’s sharper losses as worries continue about troubles for its 737 Max 9 aircraft following the recent in-flight blowout of an Alaska Air
ALK,
jet. Boeing
BA,
lost 7.9%.
In energy trading, benchmark U.S. crude
CL00,
lost 53 cents to $71.87 a barrel. Brent crude
BRN00,
the international standard, fell 51 cents to $77.78 a barrel.
In currency trading, the U.S. dollar
USDJPY,
edged up to 147.29 Japanese yen from 147.09 yen. The euro
EURUSD,
cost $1.0877, little changed from $1.0880.
Read on: China hit its economic-growth target without ‘massive stimulus,’ boasts Premier Li Qiang
