Asian shares experienced widespread declines on Tuesday as investors approached a series of upcoming earnings reports with caution. This pullback followed a lengthy and record-setting rally on Wall Street that appeared to have lost momentum.
Japan’s benchmark Nikkei 225 index fell by 1.4%, closing at 38,418.72. Australia’s S&P/ASX 200 also declined, dropping 1.7% to 8,205.70, while South Korea’s Kospi slipped 1.3% to 2,570.48. In contrast, Hong Kong’s Hang Seng index remained relatively flat at 20,486.56, and China’s Shanghai Composite gained 0.4%, ending at 3,280.04, buoyed by a recent interest rate cut that took effect on Monday.
Stephen Innes, managing partner at SPI Asset Management, commented, “The next two weeks are set to be a wild ride. Volatility has surged across stocks, bonds, and currencies as investors brace for a perfect storm of risks: a hotly contested U.S. election, critical interest-rate decisions in both the U.S. and Europe, the looming threat of a wider Middle East conflict, and the ever-present pressure of quarterly earnings.”
In the United States, the S&P 500 index slipped 0.2% to 5,853.98, marking the end of a six-week winning streak—the longest of the year. The Dow Jones Industrial Average experienced a sharper decline, dropping 0.8% to 42,931.60, while the Nasdaq composite managed a slight increase of 0.3%, closing at 18,540.00.
Real estate stocks faced the steepest losses among the 11 sectors within the S&P 500 index, with homebuilders Lennar and D.R. Horton both declining by at least 4.3%. Additionally, Home Depot’s shares fell by 2.1%, significantly impacting the S&P 500.
These declines suggest a potential pause in Wall Street’s recent rally, which had been fueled by optimism regarding the U.S. economy’s ability to navigate the highest inflation rates in decades without triggering a painful recession. The Federal Reserve’s recent decision to cut interest rates has led some investors to hope for continued stock market gains, although critics are cautioning that stock prices may appear too high given their rapid increase compared to corporate profits.
As over 100 companies in the S&P 500 prepare to report their earnings this week—including major players like AT&T, Coca-Cola, IBM, General Motors, and Tesla—pressure mounts for these firms to deliver profit growth that justifies their stock valuations.
Tesla’s shares fell 0.8% ahead of its earnings report, experiencing recent volatility, particularly after a disappointing update regarding its much-anticipated robotaxi initiative. Boeing, on the other hand, saw its stock rise by 3.1% after reaching a tentative agreement with the union representing its striking machinists. The union members are expected to vote on the contract proposal, which could potentially end a costly strike that has disrupted airplane production for over a month.
In a separate market movement, shares of Trump Media & Technology Group increased by 5.8%, reaching over $31, continuing a robust recovery since dipping below $12 last month. The company, which operates former President Donald Trump’s Truth Social platform, remains unprofitable, yet its stock is heavily influenced by perceptions of Trump’s chances in the upcoming election.
The Bank of Canada is set to announce its latest interest rate decision on Wednesday, with expectations of a possible half-percentage point cut.
In the energy markets, benchmark U.S. crude oil prices fell by 21 cents to $70.35 per barrel, while Brent crude, the international benchmark, dropped 36 cents to $73.93 per barrel. In currency trading, the U.S. dollar appreciated to 150.79 Japanese yen from 150.69 yen, and the euro rose slightly to $1.0822 from $1.0819.
Related topic: