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Asian indices mix in tumultuous trade, echoing Wall Street

TOKYO –

Asian shares were mixed on Thursday, as inflation concerns and the war in Ukraine kept investors partly optimistic while remaining cautious.

Benchmarks rose in Japan, South Korea and Australia, boosted by an overnight rally in Europe and the Dow in the US. Investors are also watching South Korea’s trade numbers for April, which showed a trade deficit, although both imports and exports rose.

Chinese President Xi Jinping is speaking at a forum where Asian leaders talk about policy. Investors are watching to see if Mr. Xi offers any hint of changes to China’s COVID policy, according to Iris Pang, chief economist at ING.

What central banks might indicate in terms of interest rates and inflation is also worrying, analysts say.

“The market will focus on inflation and the Ukraine-Russia situation,” said Lavanya Venkateswaran of Mizuho Bank in Singapore, ahead of Thursday’s discussion by the IMF board of directors with the Chair of the US Federal Reserve. Jerome Powell and European Central Bank President Christine Lagarde, Lavanya Venkateswaran of Mizuho Bank in Singapore.

Japan’s benchmark Nikkei 225 rose 1.3% in morning trade to 27,559.57. Australia’s S&P/ASX 200 rose 0.3% to 7,589.60. South Korea’s Kospi rose 0.6 percent to 2,735.37. Hong Kong’s Hang Seng fell 0.7% to 20,801.65, while the Shanghai Composite fell 0.5% to 3,134.45.

Wall Street’s main stock indexes ended mixed on a day dominated by a slump in Netflix stock, which lost more than a third of its value after reporting the first loss of subscribers in more than a decade. and predict more grim times ahead.

The S&P 500 fell 0.1% after a lackluster late afternoon, while the Nasdaq fell 1.2%. The Dow Jones Industrial Average rose 0.7% after receiving a boost from IBM, gaining 7.1% after reporting quarterly results that beat analysts’ estimates.

Netflix tumbled 35.1% a day after the streaming giant reported its first drop in subscribers in more than a decade. The company also said it expected a steeper drop in the current quarter. Netflix is ​​currently reviewing changes it has long resisted, including reducing password sharing and creating a low-cost, ad-supported subscription option. The stock is now down 67% from the all-time high it hit in November.

The slide in the price of Netflix, one of Big Tech’s top players on Wall Street in recent years, has weighed on the S&P 500, outperforming gains elsewhere in the benchmark index and taking a heavy hit. to the communications services sector, pulling it down 4.1%.

“Even though it’s in the media services, it’s also a discretionary stock, obviously one of those things that people get into,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. People buy because they want to, not because they have to. .

Tech stocks, retailers and other companies that rely on consumer spending also hit the market. Chipmaker Nvidia fell 3.2% and Amazon fell 2.6%.

Healthcare stocks had the biggest gainers. CVS rose 2.7% and medical device maker Boston Scientific rose 3%.

Banks and household product manufacturers also countered the overall market decline. JPMorgan Chase rose 0.4%, while Charmin and Dawn maker Procter & Gamble added 2.7% after beating analysts’ quarterly earnings forecasts.

Tesla jumped 4% in after-hours trading after reporting first-quarter net income that was seven times higher than a year earlier. The electric vehicle and solar panel company benefited from strong sales despite volatile global supply chains and pandemic-related output cuts in China.

All told, the S&P 500 fell 2.76 points to 4,459.45 and the Nasdaq fell 166.59 points to 13,453.07. The Dow rose 249.59 points to 35,160.79.

Shares of smaller companies hold up better than the broader market. The Russell 2000 added 7.42 points, or 0.4%, to 2,038.19.

Investors continue to focus on the company’s latest earnings round as they try to determine how companies are coping with inflationary pressures and rising costs. American Airlines and Union Pacific will report the results on Thursday.

Inflation is increasingly putting pressure on a wide range of industries and increasingly squeezing consumers.

New Zealand’s inflation rate hit a 30-year high of 6.9%, driven by rapidly rising housing and gas costs. Statistics New Zealand says the cost of building a new home has increased by 18 per cent from a year ago, while gas prices are up 32 per cent. The agency said the annual increase in prices was the highest since 1990. Inflation has picked up in developed nations around the world, including in the US, where it hit a four-decade high. 8.5% in March.

Rising prices have prompted the Federal Reserve and other central banks to raise interest rates to help curb the impact of inflation. The Fed announced a quarter percentage point rate hike and Wall Street is expected to raise rates by half a percentage point at its next meeting in two weeks.

“The market knows the Fed is going to raise rates a lot of times,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. ‘doesn’t go any further. “

Interest rates are considered “neutral” when they do not promote or limit economic growth. For now, investors expect a rate hike to raise the benchmark rate to somewhere between 2.50% and 3% by year-end, according to CME Group’s FedWatch tool.

Bond yields have risen throughout the year as Wall Street prepares for higher interest rates. The yield on the 10-year Treasury note fell to 2.84% from 2.91% late Tuesday, but remains near its highest level since late 2018.

Higher bond yields have pushed up mortgage rates and added pressure on an already tight housing market. The National Association of Realtors reported Wednesday that U.S. home sales formerly fell in March, to their slowest pace in nearly two years as mortgage rates were higher and prices were flat. record high discourages homebuyers.

Russia’s invasion of Ukraine and the ongoing conflict have only added to worries about rising inflation hurting economic growth. The conflict has pushed up energy and commodity prices.

Benchmark US crude rose 19 cents to $102.75 a barrel. It was up 0.2 percent on Wednesday, now up nearly 40 percent on the year and pushing gas prices higher. Brent crude, the international standard, rose $1.15 to $107.95 a barrel.

Wheat prices are also up 41% on the year, and that is likely to boost prices for many foods globally.

In currency trading, the US dollar rose to 128.36 Japanese yen from 127.93 yen. The euro is priced at $1.0832, inching down from $1.0853.

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AP Business Writers Damian J. Troise and Alex Veiga contributed.

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