Asian stocks were mixed on Wednesday after Wall Street indices closed little changed as investors awaited earnings results from major global companies.
Stocks rose in Tokyo and Seoul but fell in Sydney and Mumbai. Markets in Hong Kong and Shanghai were closed for the Lunar New Year holiday.
Australia reported higher than expected inflation numbers, sparking expectations for another rate hike. Consumer inflation rose 8.4% in December, beating the forecast of 7.6%. It anchored expectations for another 25 basis-point hike from the Reserve Bank of Australia in February, said Yeap Jun Rong, market analyst at IG.
Japan’s benchmark Nikkei 225 was up 0.4% to 27,395.01 in afternoon trade. Australia’s S&P/ASX 200 lost 0.3% to 7,468.30, while South Korea’s Kospi rose 1.4% to 2,428.62. Mumbai’s Sensex lost 1.1%.
On Wall Street, the S&P 500 slipped less than 0.1% to 4,016.95, its second loss in three trading days. The Dow Jones Industrial Average rose 0.3% to 33,733.96 and the Nasdaq Composite fell 0.3% to 11,334.27. Smaller company stocks also lost ground, with the Russell 2000 down 0.3% to close at 1,885.61.
Stocks have been volatile as investors try to get a better sense of how inflation is affecting the economy, the potential for a recession and whether the Federal Reserve can ease its aggressive rate hikes.
Recent earnings show that companies continue to grapple with the impact of inflation on consumers and supply chains.
Sticky notes and industrial coatings maker 3M fell 6.2%, the biggest drop among S&P 500 stocks, after it reported weak fourth-quarter earnings and announced job cuts. It’s the latest company to announce layoffs as inflation squeezes consumers and worries of a bigger contraction in spending and a possible recession mount.
Union Pacific fell 3.3% after reporting disappointing profits and earnings.
Microsoft rose 4% in after-hours trading after the software and tech giant reported earnings that beat Wall Street forecasts. In regular trading, it closed down 0.2%.
More than a dozen companies were suspended from trading on the New York Stock Exchange after an apparent technical problem caused their share prices to fluctuate as soon as the market opened. Morgan Stanley, Wells Fargo, AT&T and other stocks moved sharply at the open, triggering the halt to trading. Prices corrected after trading resumed. The NYSE said it is investigating the “reported issues” after all systems have been restored.
Markets vacillate between hope and caution as investors watch for the Fed to adjust its anti-inflation strategy. The central bank already raised its overnight interest rate from practically zero to a range of 4.25% to 4.5% early last year.
The Fed will announce its next rate hike on February 2nd. 1 and traders expect a quarter-point hike, which would mean a slowdown in central bank pace.
“Where the market and the Fed have a pretty sharp disagreement right now is how long are they going to keep rates around 5%?” said Scott Ladner, chief investment officer at Horizon Investments.
Long-term bond yields fell. The 10-year Treasury yield, which drives mortgage rates, fell to 3.46% from 3.52% late Monday.
Wall Street will have some economic updates this week that could provide more insight into the impact of inflation.
The government is due to release gross domestic product data for the fourth quarter on Thursday. Economists expect growth of less than 1% compared to 1.9% in the third quarter and a decline in the first half of 2022. Investors will get more updates on personal spending and income on Friday.
In energy trading, the US crude index rose 26 cents to $80.39 a barrel in electronic trading on the New York Mercantile Exchange. It settled 1.8% lower overnight. Brent crude, the international price standard, rose 36 cents to $86.49 a barrel.
In forex trading, the US dollar rose to 130.33 Japanese yen from 130.18 yen. The euro costs $1.0905 and rises from $1.0889.
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