Asian Stocks Show Divergence as Investors Anticipate US Jobs Data
Asian stock markets were divided on Friday ahead of a U.S. employment report that could influence interest rate plans following a key lending rate increase by the British central bank.
Shanghai, Hong Kong, and Seoul all increased in value. Sydney and Tokyo declined. Oil prices increased.
Wall Street fell for a third day after the Bank of England raised its benchmark lending rate to a 15-year high and signaled that it may remain elevated for some time.
Investors were unnerved the day before when Fitch Ratings lowered its credit rating on U.S. government debt, despite analyst assertions that the change would have little impact.
The Shanghai Composite Index rose 0.6% to 3,301.26 after the governor of China’s central bank announced on Thursday that real estate developers would be permitted to sell more bonds. This further relaxes debt restrictions imposed in 2020, which sent the industry spiraling downward.
The Hang Seng in Hong Kong increased by 1.2% to 19,649.78, while the Nikkei 225 in Tokyo decreased by 0.1% to 32,129.49.
The Kospi in Seoul rose 0.1% to 2,607.90 while the S&P-ASX 200 in Sydney declined less than 0.1% to 7,306.
The Sensex opened 0.6% higher at 65,674.90. Bangkok and New Zealand gained while Singapore and Jakarta lost ground.
The S&P fell 0.2% to 4,501.89 on Wall Street a day after its largest daily decline in four months.
The Dow Jones Industrial Average fell 0.2% to 35,215.89, while the Nasdaq fell 0.1% to 13,957.72.
Read Also: Weighing the Benefits and Risks: Paying Your Mortgage via Credit Card
Rate Hikes and Economic Resilience: Will the U.S. Economy Dodge Recession?
Investors are observing whether the U.S. economy can avoid a recession after repeated rate hikes to combat inflation over the past year.
On Friday, the U.S. government was anticipated to release its most recent report on the surprisingly robust labor market.
Fed Chair Jerome Powell cited this as a factor the U.S. central bank considers when determining whether to increase interest rates.
Traders have postponed the potential onset of a recession and expressed optimism that it may be milder as a result of robust hiring. However, the Fed may view robust employment as contributing to inflationary pressure and raise interest rates once more.
According to critics, Wall Street has formed too rapidly a consensus that inflation will moderate, allowing the Fed to begin rate cuts early next year.
The Bank of England cautioned that it was too soon to declare an end to rate rises because certain inflation risks, such as wage increases, had “begun to crystallize.” The bank forecasts that inflation will fall to 4.9% by the end of the year, which is more than double its target of 2%.
On Thursday, Treasury yields on the bond market increased, causing investors to sell equities.
The yield on 10-year Treasuries, or the difference between the day’s market price and the payout at maturity, rose from 4.0 percent to 4.18 percent as of late Wednesday. It increased from 2.75 percent a year earlier.
Qualcomm, a manufacturer of processor circuits for smartphones and other devices, experienced one of the largest declines in the S&P 500, falling 8.2%. It reported weaker spring revenue than anticipated, but its profit exceeded projections.
On the winning side was the manufacturer of cleaning products Clorox, whose stock rose 9%. It reported greater profit and revenue than anticipated by analysts.
Exxon Mobil increased by 1.7%. As a result of Saudi Arabia’s announcement that it will maintain production limits aimed at boosting oil’s price, crude prices increased.
After trading ceased for the day, two enormously influential companies announced their results.
Apple and Amazon are two of the largest companies on Wall Street in terms of market capitalization, which lends their stock movements greater weight on the S&P 500 and other indexes.
In addition, both increased by more than 45 percent this year due to expectations of continued growth. That means they are under pressure to produce substantial results to justify the substantial stock gains.
Read Also: Greenland Ice Sheets More Vulnerable to Climate Change Than Previously Believed
Source: Independent