Asian Markets Mixed as Wall Street Hits New Records

by Yuki

Asian stock markets displayed mixed results on Tuesday following a series of record highs on Wall Street. Notably, Hong Kong’s benchmark index suffered a significant loss, dropping more than 4%.

U.S. futures showed modest gains, while oil prices experienced a sharp decline, falling over $3 per barrel.

Chinese shares continued their downward trajectory after the government released data indicating a substantial decline in exports for September, further highlighting economic vulnerabilities. The Shanghai Composite index fell by 2.5% to close at 3,201.29, while Hong Kong’s Hang Seng index decreased by 4.4% to 20,166.88.

Market sentiment in China remains fragile, exacerbated by disappointing data on lending and prices. Investors are closely monitoring the government’s plans for fiscal stimulus to revitalize the economy. Yeap Jun Rong from IG commented, “Market participants continue to seek clarity around fiscal stimulus support from Chinese authorities, but the lack of commitment remains a source of reservation for risk-taking in Chinese equities.”

In contrast, Tokyo’s Nikkei 225 index rose by 0.8% to 39,910.55, while the Kospi in Seoul recorded a 0.4% increase to 2,633.45. Australia’s S&P/ASX 200 also rose, gaining 0.8% to reach 8,318.40.

Early Tuesday trading saw the U.S. dollar drop to 149.22 Japanese yen, down from 149.83 yen, while the euro fell to $1.0894 from $1.0911.

In the commodities market, U.S. benchmark crude oil prices fell by $3.05 to $70.78 per barrel, while Brent crude, the international standard, decreased by $3.16 to $74.30 per barrel. Alongside oil, prices for copper and other commodities crucial to a thriving Chinese economy are also declining.

On Monday, Wall Street celebrated a series of all-time highs. The S&P 500 increased by 0.8%, closing at 5,859.85, building on its record set on Friday. This marks the index’s fifth consecutive winning week, positioning it for its longest streak of the year. The Dow Jones Industrial Average rose 0.5% to 43,065.22, gaining 201 points, while the Nasdaq composite climbed 0.9% to 18,502.69.

These gains were observed amid relatively quiet trading in Europe, as the U.S. bond market remained closed for a holiday.

Boeing faced a 1.3% decline in its stock price, marking its first trading session since the aerospace company revealed it anticipates a cash burn of $1.3 billion during the latest quarter, resulting in a loss of $9.97 per share. Additionally, Boeing announced it would lay off 10% of its workforce due to a labor strike affecting production of its best-selling airline models.

Looking ahead, the week presents few major economic reports, with the focus shifting to corporate earnings announcements. Major companies including Bank of America, Johnson & Johnson, and UnitedHealth Group are set to release their latest financial results on Tuesday. Following these, United Airlines, Netflix, American Express, and Procter & Gamble will also report later in the week.

Analysts anticipate that S&P 500 companies will report a 4.1% increase in earnings per share for the most recent quarter compared to the previous year, according to FactSet. If this prediction holds, it will mark the fifth consecutive quarter of growth.

The recent stock market rally is attributed to investor relief over declining interest rates, as the Federal Reserve adjusts its strategy to prioritize economic stability alongside combating inflation. Furthermore, recent data indicating a stronger-than-expected U.S. economy has fostered optimism about a potential “soft landing” scenario, where inflation is brought down to 2% without triggering a recession.

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