Tokyo, Aug 6: Asian shares were mostly higher in muted trading Wednesday, after discouraging signs about the US economy sent Wall Street shares declining.
Investors are sifting through a slew of corporate earnings reports to assess how businesses may have been affected by US President Donald Trump’s tariffs.
Among Japanese companies, automakers Honda Motor Co and Toyota Motor Corp will report fiscal first quarter results this week, as will electronics and entertainment company Sony Corp.
Japan’s benchmark Nikkei 225 rose 0.6 per cent to finish at 40,794.86. Australia’s S&P/ASX 200 added 0.8 per cent to 8,843.70. South Korea’s Kospi was little changed, gaining less than 0.1 per cent to 3,198.14.
Hong Kong’s Hang Seng rose 0.2 per cent to 24,958.75, while the Shanghai Composite gained 0.8 per cent to 3,633.99.
US futures were up 0.5 per cent.
On Tuesday, the S&P 500 fell 0.5 per cent to 6,299.19, coming off a whipsaw stretch where it went from its worst day since May to its best since May. The Dow Jones Industrial Average dropped 0.1 per cent to 44,111.74, and the Nasdaq composite fell 0.7 per cent to 20,916.55.
A weaker-than-expected report on activity for US businesses in services industries like transportation and retail added to worries that Trump’s tariffs may be hurting the economy. But conversely such indicators raise hopes the Federal Reserve may cut interest rates.
That along with a stream of stronger-than-expected profit reports from US companies helped to keep losses in check. The S&P 500 remains within 1.4 per cent of its record.
The pressure is on companies to report bigger profits after the US stock market surged to record after record from a low point in April. The big rally fuelled criticism that the broad market had become too expensive.
For stock prices to look like better bargains, companies could produce bigger profits, or interest rates could fall. The latter may happen in September, when the Fed has its next policy meeting.
Expectations have built sharply for a rate cut at that meeting since a report on the US job market on Friday came in much weaker than economists expected. Lower interest rates would make stocks look less expensive, while also giving the overall economy a boost. The potential downside is that they could push inflation higher.
Treasury yields sank sharply after Friday’s release of the jobs report, and they haven’t recovered. The yield on the 10-year Treasury eased to 4.19 per cent from 4.22 per cent late Monday and from 4.39 per cent just before the release of the jobs report. That’s a significant move for the bond market.
In energy trading, benchmark US crude rose 57 cents to USD 65.73 a barrel. Brent crude, the international standard, added 64 cents to USD 68.28 a barrel.
In currency trading, the US dollar edged up to 147.66 Japanese Yen from 147.61 Yen. The Euro cost USD 1.1575, down from USD 1.1579. (AP)
