Stock market today: Asian benchmarks are mixed as Tokyo drinks in strong yen

TOKYO – Asian stocks traded mixed on Thursday, with Tokyo’s benchmark index tumbling and the US dollar falling against the yen.

Regional investors are also digesting the rally on Wall Street that emerged on hopes that US interest rate cuts would arrive soon.

A strong yen is a boon for Japan’s purchases, but it hurts the country’s giant exporters such as Toyota Motor Corp. by eroding the value of overseas profits.

Japan’s benchmark Nikkei 225 index fell 2.5% to 38,126.33. S of Australia&P/ASX 200 rose 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 US dollar rose to 150.21 Japanese yen from 149.92 yen. The euro was priced at US$1.0815, little changed from US$1.0830. The dollar had been trading at 160 yen levels for several weeks. But that reversed course as expectations grew for a rate cut from the Bank of Japan, which occurred on Wednesday.

Toyota shares plunged 8.5%, while Nintendo fell 3.4% and Sony 3.3%.

Analysts said indications from the Federal Reserve were that rate cuts were coming.

“A cut in September is now priced in with certainty, and almost three cuts are priced in by the end of the year,” said Robert Carnell, regional head of Asia-Pacific research at ING Economics.

On Wall Street, the S&OP 500 jumped 1.6%, its best day since February. The Dow Jones Industrial Average rose 99 points, or 0.2%, and the Nasdaq Composite rose 2.6%.

The broad-based gains came as Treasury yields eased in the bond market after the Federal Reserve gave the clearest indication that it could start cutting interest rates in September. Fed Chairman Jerome Powell said policymakers are “getting closer to the point” of comfort on inflation, where they could cut rates for the first time since COVID-19 wrecked the economy.

“We think the moment is approaching,” Powell said. “And if we get the data we hope to get, then a reduction in our policy rate could be on the table at the September meeting.”

After the Fed voted to hold interest rates steady on Wednesday, as was widely expected, Powell spent much of the ensuing press conference discussing the risks of both moving forward too soon or too late with rate cuts. . One could allow inflation to reaccelerate, while the other could cause unnecessary pain to the economy and ultimately drive Americans out of their jobs.

After holding the key interest rate at its highest level in two decades for about a year, speculation may grow that the Fed waited too long. This “has the potential to increase stock market instability as we head into what is historically its most volatile period,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.

On Wednesday, however, the prevailing mood on Wall Street was one of jubilation.

Advanced Micro Devices rose 4.4% after reporting better profits and revenue last quarter than analysts expected, thanks in part to an acceleration in its artificial intelligence business. This helped to drive Nvidiathe chip company that became the poster child for Wall Street business frenzy around AIup 12.9% a day after losing 7%.

The performance of these Big Tech stocks is very important because they are the most valuable companies on Wall Street, and this gives them the most influence on the S.&P 500. A handful of these stocks, known as the “Magnificent Seven,” have driven the U.S. stock market to dozens of records this year, even as many other stocks struggled under the weight of high interest rates. But they lost momentum this month amid criticism that they had become too expensive and expectations were too high.

These criticisms have not gone away and Microsoft fell 1.1% despite reporting profits and revenue in the last quarter that exceeded analysts’ expectations. Growth of its Azure cloud computing business fell slightly short of analysts’ forecasts. This followed previous profit reports from Tesla It is Alphabet which investors found to be underwhelming, which raised concerns that Magnificent Seven’s other stocks might also fail to impress.

Metaplatforms rose 2.5% as investors awaited its earnings report, which arrived after the close of trading on Wednesday. Amazon and Apple will follow on Thursday, and each is up at least 1.5%.

Stronger-than-expected earnings reports from companies outside the Magnificent Seven also helped boost the market.

Match Group jumped 13.2% after saying its users’ Tinder trends are stabilizing and reporting results for the latest quarter that roughly matched analysts’ expectations.

DuPont rose 4.1% after reporting better-than-expected profits and revenue, thanks in part to a recovery in its electronics business, and the chemical giant raised its full-year financial forecast.

They helped offset Altria Group’s 3% drop after the cigarette and smoke-free products maker fell short of profit and revenue expectations in the latest quarter.

Altogether, the S&OP 500 rose 85.86 points to 5,522.30. The Dow Jones rose 99.46 to 40,842.79 and the Nasdaq Composite jumped 451.98 to 17,599.40.

In the bond market, the 10-year Treasury yield fell to 4.05% from 4.14% on Tuesday. It is falling from 4.70% in April as a slowdown in inflation increased expectations for upcoming interest rate cuts.

Yields fell in the morning after a report showed that U.S. employers spent less on total worker wages and benefits during the spring than economists had expected. Another suggested that hiring by non-government employers was somewhat weaker than expected.

While workers would certainly like these numbers to be stronger, they could be the kind of “Goldilocks” data that Wall Street looks for: not so strong that it pushes inflation higher, but not so weak that it raises concerns about a recession.

Some of Wednesday’s strongest action came in the oil market, where the price of a barrel of benchmark U.S. crude rose about 4%. Hamas’s main political leader, Ismail Haniyeh, died in a pre-dawn air raid in the Iranian capital on Wednesday morning, Iran and the militant group said, blaming Israel for a shocking killing that could escalate conflict in the region and potentially disrupt the flow of oil. There was no immediate comment from Israel.

Benchmark U.S. 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 Writer Stan Choe contributed.