Asian stocks fall after weak earnings pull Wall St lower

BANGKOK (AP) — Asian stocks were mostly down on Thursday after Wall Street benchmarks fell and Japan reported a 14th straight month of monthly trade deficits due to high oil and other commodity prices. commodities and the weakening of the yen.

Wall Street futures were mixed as oil prices rose.

Japan’s trade deficit hit a record high in the first half of the year, although it narrowed slightly from the previous month and was lower than analysts’ forecasts.

The finance ministry said on Thursday that imports were up nearly 46% from the same month a year ago due to higher oil and gas prices. Imports increased for 20 consecutive months year on year.

The dollar strengthened against currencies around the world as fears of inflation and recession prompted investors to seek relatively stable investments. The yen is now trading at a 32-year low against the dollar, changing hands at 149.93 Japanese yen early Thursday, from 149.81 yen the day before.

The euro slipped to 97.59 cents from 97.73 cents.

“As is often the case, rising US yields and the strength of the US dollar are the masses dragging global equities down,” Stephen Innes of SPI Asset Management said in a commentary.

In equity trade, Tokyo’s Nikkei fell 0.9% to 27,006.96, recovering some lost ground, while Seoul’s Kospi fell 0.9% to 2,216.49. In Hong Kong, the Hang Seng lost 1.6% to 16,254.32.

The Shanghai Composite was flat at 3,044.77 and Australia’s S&P/ASX 200 fell 1% to 6,730.70.

Wall Street’s pullback on Wednesday came as investors scrutinized quarterly earnings reports and Treasury yields hit multi-year highs, tempting traders with higher yields on relatively low-risk investments.

Early gains quickly faded. The S&P 500 fell 0.7% to close at 3,695.16, while the Dow Jones Industrial Average slid 0.3% to 30,423.81. The Nasdaq composite ended down 0.9% at 10,680.51.

Small companies fell more than the rest of the market, sending the Russell 2000 index down 1.7% to 1,725.76.

The shares were coming off two days of gains, but trading was choppy throughout.

Netflix soared 13% and United Airlines rose 5% after reporting its quarterly results, while others including Abbott Laboratories and M&T Bank sank.

The 10-year Treasury yield, which influences mortgage rates, climbed to 4.13%, its highest level since June 2008. It was at 4.02% on Tuesday evening. The two-year Treasury yield, which tends to track expectations for future Federal Reserve action, rose to 4.54% from 4.43%.

A sharp move in the three-month Treasury may have helped put traders in a selling mood. The yield briefly hit 4.01% before falling back to 3.98%. If the yield on the three-month Treasury were to rise above that of the 10-year Treasury, known as a reversal, it would be a strong warning that the economy could be heading into a recession.

The Federal Reserve raised interest rates to temper high prices. The increases are intended to make borrowing harder and slow economic growth in an effort to control inflation, but the strategy risks stalling the already slowing U.S. economy.

Homebuilder Lennar fell 6% and home improvement retailer Lowe’s fell 4.8% following a report showing new home construction fell more than expected in September.

US crude oil prices rose 3.3%, giving energy stocks a boost. Exxon Mobil rose 3%. The White House plans to announce another release of oil from the US Strategic Reserve.

Early Thursday, benchmark U.S. crude rose $1.07 to $85.59 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international price standard, climbed 74 cents to $93.15 a barrel.

Investors have focused on the latest round of corporate earnings this week, looking for clues as to how companies are coping with the highest inflation in four decades and how they intend to operate during the rest of the year and until 2023.

Homewares giant Procter & Gamble rose 0.9% after also posting strong financial results. It is among a growing list of companies, including Hasbro and Johnson & Johnson, warning investors of a strong US dollar squeezing income.

Central governments and banks around the world face stubbornly high inflation. UK food prices rose at the fastest pace since 1980 last month, driving inflation back to a 40-year high.

Comments are closed.