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Asian stocks fell on Thursday after strong selling by big-name tech stocks pushed Wall Street benchmarks lower.
Stocks fell in Tokyo, Hong Kong, Seoul and Sydney, but rose in Shanghai. US futures were lower. Oil prices fell.
The declines came despite a sharp upward revision of Japan’s estimated economic growth rate for the January-March quarter to 2.7%. That was above what analysts had expected.
Japan’s benchmark Nikkei 225 was down 0.9% at 31,641.27. Australia’s S&P/ASX 200 lost 0.3% to 7,099.70. South Korea’s kospi fell 0.2% to 2,610.85.
Hong Kong’s Hang Seng fell less than 0.1% to 19,242.26. The Shanghai Composite was up 0.4% to 3,211.44.
Taiwan’s Taiex lost 1.1% while India’s Sensex lost 0.2%.
US stocks posted a mixed close on Wednesday as falls at Microsoft and other tech stocks overshadowed gains for much of the rest of the market. It’s a reversal from most of this year as enthusiasm for artificial intelligence and hopes of an end to rate hikes have boosted the tech sector.
The Japanese economy has been recovering since restrictions related to the coronavirus pandemic were lifted. The country saw a return of tourists and other economic activities.
The focus now is on when the Bank of Japan might move away from the loose monetary policy it has pursued for years. Over the past year, the US Federal Reserve and other central banks around the world have hiked interest rates. The Japanese key interest rate is minus 0.1%.
“While a higher growth reading could offer some scope for an exit from Bank of Japan policy, the central bank’s stance could remain unchanged for now as recent comments from Governor Kazuo Ueda suggest more wait-and-see,” Yeap said Jun Rong, a Market analyst at IG, in a report.
On Wall Street, the S&P 500 fell 0.4% to 4,267.52, even as the majority of stocks in the index rose. The Dow Jones Industrial Average rose 0.3% to 33,665.02, while the Nasdaq Composite fell 1.3% to 13,104.89.
Microsoft, Amazon, Nvidia, and Alphabet were all down at least 3% and were the heaviest weights in the S&P 500. Because they’re among Wall Street’s most valuable stocks, their moves add extra clout to the index.
The Russell 2000 index of smaller stocks jumped 1.8%, continuing its upward trend as a stronger-than-expected hiring report last week suggested a recession might be further away than feared.
The market has been on an uptrend for months thanks to a robust economy that has managed to defy forecasts of a recession. But the danger still looms, and Wall Street is wondering which comes first: a recession or inflation falling enough for the Federal Reserve to cut interest rates?
Most traders expect the Fed to leave rates unchanged next week. It would be the first monetary policy meeting in more than a year in which it did not raise interest rates, which are at their highest levels since 2007. But the Fed could resume rate hikes in July.
The goal of higher interest rates is to curb high inflation by slowing down the overall economy and lowering the prices of stocks, bonds, and other assets. Pressure from high interest rates is weighing on the banking and manufacturing industries in the US, although the labor market has remained solid.
In the bond market, the yield on the 10-year Treasury rose to 3.78% from 3.68% late Tuesday. It helps set interest rates on mortgages and other major loans. The two-year yield, which is closer to Fed expectations, rose to 4.55% from 4.50%.
In energy trading on Thursday, the benchmark U.S. crude price fell 6 cents to $72.47 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the price rose 79 cents to $72.53. Brent crude, the international standard, fell 9 cents to $76.86 a barrel.
In forex trading, the US dollar fell to 139.84 Japanese yen from 140.10 yen. The euro cost $1.0716, up from $1.0698.
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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
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