Stock Market Today: Asian markets are largely lower despite good news about the US economy, with Japan’s benchmark plunging as the latest data indicated inflation has been slowing quicker than predicted.
Despite positive economic news from the United States, Asian equities were largely lower on Friday, with Japan’s benchmark dipping as the latest data showed inflation slowing quicker than predicted. Tokyo’s Nikkei 225 fell 1.3% to 35,751.07 as a key measure of inflation fell quicker than predicted in January, to 1.6% from 2.4% in December. Weaker price increases reduce the pressure on the Bank of Japan to tighten its ultra-loose monetary policy, which has injected vast quantities of cash into markets. The central bank’s aim for inflation is 2%.
“The BOJ will wait a few months to assess the underlying trend of the inflation rate. In a report, Robert Carnell, ING’s regional head of research Asia-Pacific, predicted that inflation will rise beyond 2% by February. Chinese markets broke a winning streak as the government made a series of moves to support share prices and the property sector.
Hong Kong’s Hang Seng fell 1.6% to 15,954.86, while the Shanghai Composite rose 0.1% to 2,910.22. South Korea’s Kospi index increased 0.3% to 2,478.56. Australia’s markets were closed for a national holiday. On Wall Street, the S&P 500 rose 0.4% to 4,894.16 on Thursday, setting a new high for the fifth consecutive day. The Dow Jones Industrial Average rose 0.6% to 38,049.13, while the Nasdaq Composite added 0.2% to 15,510.50.
IBM helped led the market with a 9.5% increase after reporting a higher profit for the most recent quarter than analysts predicted. Four out of five S&P 500 stocks rose alongside it, but Tesla’s 12.1% loss capped the market’s gains. The electric vehicle manufacturer reported earnings and revenue that fell short of expectations, warning of slower sales growth this year.
Wall Street’s primary attention was on a report stating that the US economy is continuing to grow, destroying last year’s expectations of an impending recession due to rising interest rates. According to an initial assessment from the US government, the economy increased at a 3.3% annual rate in the final three months of 2023. According to FactSet, this was significantly higher than the 1.8% growth forecast. Such a resilient economy should boost corporate profits, which are one of the primary factors that influence stock prices.
The report also provided promising evidence that inflation continuing to decline at the end of 2023. The Federal Reserve is expected to begin decreasing interest rates this year, since inflation has fallen from its peak two summers ago. This would relieve financial market pressures and raise investment prices.
“The headline data are the ideal combination of strong consumption and falling inflation,” said Jamie Cox, managing partner at Harris Financial Group. “This is exactly what you want to see if you are running the Fed and want to move rates lower this year.”
According to a second study, more Americans applied for unemployment benefits last week, although the number remained low in comparison to previous years, indicating a healthy job market. Treasury yields fell in the bond market amid expectations of rate cuts. The 10-year Treasury rate fell to 4.10%, from 4.16% before the data was released and 4.18% late Wednesday. In October, it was at 5%, the highest since 2007.
Elsewhere on Wall Street, earnings season continued to accelerate, with more than two dozen S&P 500 businesses publishing their latest results late Wednesday or early Thursday. American Airlines surged 10.3% after announcing a substantially higher-than-expected profit in the previous quarter. Humana fell 11.7% on Wall Street after reporting lower-than-expected results for the end of 2023.
In energy trade, benchmark US crude fell 50 cents to $76.86 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the worldwide standard, dropped 54 cents to $81.42 per barrel. In currency trading, the US dollar rose slightly to 147.85 Japanese yen from 147.64. The euro costs $1.0817, down from $1.0848.
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