TOKYO — Asian shares traded mixed on Thursday as Tokyo’s benchmark fell as the US dollar fell against the yen.
Regional investors are also busy digesting the rally on Wall Street, which came on the hope that US interest rates would be cut soon.
A strong yen is a plus for Japanese purchases but hurts the country’s giant exporters, such as Toyota Motor Corp., by reducing the value of overseas earnings.
Japan’s benchmark Nikkei 225 fell 2.5% to 38,126.33. Australia’s S&P/ASX 200 rose marginally by 0.3% to 8,114.70. South Korea’s Kospi rose 0.3% to 2,777.68. Hong Kong’s Hang Seng fell less than 0.1% to 17,340.31, while the Shanghai Composite lost 0.2% to 2,933.81.
In currency trading, the U.S. dollar rose to 150.21 Japanese yen from 149.92 yen. The euro was worth $1.0815, little changed from $1.0830. The dollar was trading at 160 yen a few weeks ago. But that changed as expectations grew for a rate cut by the Bank of Japan, which came on Wednesday.
Shares of Toyota fell 8.5%, while Nintendo fell 3.4% and Sony fell 3.3%.
Analysts said the Federal Reserve was signaling that rate cuts were coming.
“A rate cut in September is now priced in with certainty, and almost three rate cuts are priced in by year-end,” said Robert Carnell, regional head of Asia Pacific research at ING Economics.
On Wall Street, the S&The P 500 jumped 1.6% for its best day since February. The Dow Jones Industrial Average rose 99 points, or 0.2%, and the Nasdaq Composite rose 2.6%.
The widespread gains came as government bond yields fell in the bond market after the Federal Reserve gave the clearest indication yet that it could start cutting interest rates in September. Fed Chair Jerome Powell said policymakers are “getting closer to the point” of comfort about inflation where they could cut rates for the first time since COVID-19 sent the economy into a tailspin.
“We think the time is approaching,” Powell said. “And if we get the data we hope to get, then a cut in our policy rate could be on the table at the September meeting.”
After the Fed voted Wednesday to keep interest rates steady, as widely expected, Powell spent much of the ensuing press conference discussing the risks of cutting rates too early and too late. One could send inflation back up, while the other could inflict unnecessary pain on the economy and ultimately force Americans out of their jobs.
After holding key rates at a 20-year high for about a year, there is some speculation that the Fed waited too long. That “could cause even more volatility in stock markets as we head into what is historically the most volatile period,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.
However, the mood on Wall Street on Wednesday was mainly jubilant.
Advanced Micro Devices rose 4.4% after reporting better earnings and revenue for its latest quarter than analysts had expected, helped by an acceleration in its artificial intelligence business. That helped Nvidiathe chip company that has become the poster child for Wall Street’s madness around AIup 12.9% a day after it lost 7%.
The performance of such Big Tech stocks matters a lot because they are the most valuable companies on Wall Street and therefore have the greatest influence on the S.&P500. A handful of these stocks, known as the “Magnificent Seven,” propelled the U.S. stock market to dozens of records this year as many others struggled under the weight of high interest rates. But they lost momentum this month amid criticism that they had become too expensive and expectations had become too high.
This criticism has not gone away and Microsoft fell 1.1% despite the company reporting profits and revenue for its latest quarter. exceeded analysts’ expectations. Growth at its Azure cloud computing business fell slightly short of analysts’ forecasts, following earlier earnings reports from Tesla And Alphabet which investors did not find very positive, raising concerns that other Magnificent Seven stocks would also fail to catch on.
Meta platforms rose 2.5% as investors awaited the earnings report, which was released after the close of trading on Wednesday. Amazon and Apple followed suit on Thursday, both rising at least 1.5%.
Better-than-expected earnings reports from companies outside the Magnificent Seven also contributed to the market’s growth.
Match Group rose 13.2% after the company reported Tinder user trends were stabilizing and its latest quarter results were broadly in line with analysts’ expectations.
DuPont rose 4.1% after better-than-expected profit and revenue, helped by a recovery in the electronics sector, and the chemical giant raised its full-year financial forecast.
They offset a 3% decline for Altria Group, after the maker of cigarettes and smoke-free products missed profit and revenue expectations in the latest quarter.
All in all, the S&The P 500 rose 85.86 points to 5,522.30. The Dow rose 99.46 points to 40,842.79 and the Nasdaq Composite jumped 451.98 points to 17,599.40.
In the bond market, the yield on the 10-year Treasury note fell to 4.05% from 4.14% Tuesday night. It is down from 4.70% in April as a slowdown in inflation raised expectations for upcoming rate cuts.
Yields fell in the morning after a report showed U.S. employers spent less on total payrolls and benefits for workers in the spring than economists had expected. Another report suggested hiring by non-government employers was slightly weaker than expected.
While workers would undoubtedly like to see such numbers stronger, it could be the kind of “Goldilocks” data Wall Street is looking for: not so strong that it pushes up inflation, but not so weak that it raises concerns about a recession.
One of the strongest actions on Wednesday was in the oil market, where the price of a barrel of U.S. benchmark crude rose by about 4 percent. Hamas’s top political leader, Ismail Haniyeh, died in a air raid before dawn in the Iranian capital early Wednesday, Iran and the militant group said, blaming Israel for a shocking killing that could escalate the conflict in the region and disrupt the flow of oil. There was no immediate comment from Israel.
U.S. benchmark crude rose 64 cents to $78.55 a barrel. Brent crude, the international standard, rose $2.09 to $80.72 a barrel.
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AP Business journalist Stan Choe contributed.
