Asian shares mixed as investors keep an eye on inflation, earnings


Asian shares traded mixed on Tuesday as investors weighed oil prices, inflation worries and corporate earnings.

Benchmarks in Tokyo and Shanghai are higher in morning trading. Shares fell in Sydney, South Korea and Hong Kong, where investor sentiment softened after an early rally on Wall Street evaporated.

“This news paints a worsening picture for the outlook for major companies amid concerns about global growth. Anderson Alves, a trader at ActivTrades, said:

Japan’s benchmark Nikkei 225 reversed initial losses and rose 0.8% in morning trade to 27,013.98. Australia’s S&P/ASX 200 fell 0.2% to 6,675.50. South Korea’s Kospi fell 0.2 percent to 2,369.68. Hong Kong’s Hang Seng fell 0.7% to 20,702.53, while the Shanghai Composite added 0.1% to 3,281.46.

Analysts say the Tokyo market is seeing some buying after the three-day weekend. Monday is a national holiday in Japan. Investors are playing catch-up and so the rally may be short-lived. Among the issues covered so far are Fast Retailing, a subsidiary of clothing retail chain Uniqlo, as well as Sony Corp.

The S&P 500 index fell 32.31 points, or 0.8%, to 3,830.85, after gaining 1% previously. The index broke a five-day losing streak at the end of last week.

Profits for energy producers, large retailers and other companies that rely on consumer spending have outperformed declines in technology and healthcare stocks.

The Dow fell 215.65 points, or 0.7%, to 31,072.61 and the Nasdaq fell 92.37 points, or 0.8%, to 11,360.05. The Russell 2000 index of smaller companies also fell. It fell 5.96 points, or 0.3%, to 1,738.42.

The market is likely to remain volatile during the upcoming earnings season. Johnson & Johnson, American Airlines and Tesla are among dozens of S&P 500 companies scheduled to release quarterly snapshots this week.

US markets have mostly sunk lower for weeks on fears that the Federal Reserve and other central banks will brake too hard on the economy in hopes of easing high inflation. If they go too aggressively with interest rate hikes, they could trigger a recession.

A key report released last week showed that inflation expectations among households are easing. That could prevent a more vicious cycle from taking root and ease pressure on the Federal Reserve.

Expectations have dropped about how aggressively the Federal Reserve will raise interest rates at its meeting next week. Traders are currently betting on an approximately one in three chance of hitting a monster’s full percentage point gain, with the majority favoring a 0.75 percentage point gain. Most recently on Thursday, the big bets increased to a full point.

Economists at Goldman Sachs are among those forecasting a 0.75-point gain, roughly the same as last month’s, rather than a stronger gain. They specifically cited a reduction in inflation expectations after Chairman Jerome Powell said last month that the Fed was paying close attention to them.

This weekend, investors expect the European Central Bank on Thursday to raise interest rates for the first time in 11 years to combat inflation. Many investors expected a gain of 0.25 percentage points, “but more is not unthinkable,” the economists wrote in a report by BofA Global Research.

Interest rates are one of the two main levers that determine stock prices. The rest is corporate profits, which are threatened by high inflation and a downturn in parts of the economy. For now, at least, analysts are still forecasting continued growth.

Earnings season kicked off last week, and banks dominated the early part of their schedule for reporting earnings from April to June.

Goldman Sachs was one of the latest companies to report, and it jumped 2.5% after its profit and revenue were better than analysts expected.

In the bond market, the 10-year bond yield rose to 2.98% from 2.96% late Friday. The two-year yield, which rose to 3.17%, is still above the 10-year yield. Some investors see it as an ominous sign that could herald a recession in a year or two.

In energy trading, the price of benchmark US crude fell 20 cents to $102.40 a barrel. It rose 5.1% on Monday. International benchmark Brent crude lost 34 cents to $105.93 a barrel.

In currency trading, the US dollar rose to 138.21 Japanese yen from 138.12 yen. The euro is priced at $1.0135, down from $1.0150.


AP Business Writers Stan Choe and Alex Veiga contributed.

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