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Asian equities were mixed on Wednesday as investors took a wait and see stance ahead of earnings reports and possible central bank action.
Japan’s benchmark Nikkei 225 slipped 0.2% to close at 28,606.76. Australia’s S&P/ASX 200 rose almost 0.1% to 7,365.50. South Korea’s Kospi was up less than 0.1% to 2,573.58. Hong Kong’s Hang Seng slipped 1.2% to 20,410.16. The Shanghai Composite lost 0.6% to 3,371.66.
News that China’s economic growth accelerated to 4.5% a year in the most recent quarter didn’t impact stock prices much. While consumption and retail sales have risen, other indicators such as industrial production and fixed investment have weakened, pointing to a uneven recovery.
“It may still be a worst story, but the recovery has proven more gradual than a one-shot wonder,” Yeap Jun Rong, a market analyst at IG, said in a report.
Wall Street closed little changed after a day of meandering trading. The S&P 500 edged up 0.1% to 4,154.87 after drifting between small gains and losses throughout the day.
The Dow Jones Industrial Average slipped less than 0.1% to 33,976.63 and the Nasdaq Composite slipped less than 0.1% to 12,153.41.
Lockheed Martin was one of Wall Street’s biggest winners. It rose 2.4% after reporting earnings for the most recent quarter that beat analysts’ expectations.
Bank of America rose 0.6% after its better-than-expected earnings report led to a trading day of ups and downs. The majority of companies have beaten forecasts in the early days of this earnings season so far.
The bar was low amid Wall Street worries about still-high inflation, much higher interest rates and slower growth in some areas of the economy. Analysts came into this reporting season forecasting the sharpest fall in earnings per share for S&P 500 companies since the pandemic torpedoed the economy in 2020.
Several companies stumbled after failing to meet expectations. Goldman Sachs fell 1.7% after its earnings fell short of analysts’ forecasts, despite earnings beating expectations.
Health care stocks were generally weak and the largest weight in the S&P 500 of the 11 sectors that make up the index. Johnson & Johnson fell 2.8% despite reporting stronger-than-expected earnings and increasing its dividend.
Reports from several dozen other companies in the S&P 500 will appear later this week. These include big names like AT&T, Tesla and Procter & Gamble.
Wall Street’s attention will also turn to coverage of smaller regional banks like KeyCorp and Zions Bancorp, whose shares took a hit last month after the second- and third-largest US bank failures in history.
The concern was that customers could suddenly pull their deposits out of banks, similar to the runs that toppled Silicon Valley Bank and Signature Bank. The focus was mostly on regional banks rather than the giant “too big to fail” banks like JPMorgan Chase and Bank of America.
These big banks have so far reported better-than-expected profits, and their immense size may have helped attract deposits amid the turmoil. Their strength has helped calm markets somewhat.
A bigger concern for the economy is that the problems in the banking sector could lead to a contraction in lending and strain an economy already suffering from the weight of much higher interest rates.
The Federal Reserve has been raising interest rates at a rapid pace over the past year in hopes of slowing high inflation. High interest rates can stifle inflation, but only by slowing down the entire economy in one fell swoop, increasing the risk of a recession and hurting investment prices.
Inflation is slowing but still high and traders are generally expecting the Fed to hike rates again at its next meeting in May.
In energy trading, the US crude index fell 47 cents to $80.39 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 44 cents to $84.33 a barrel.
In forex trading, the US dollar rose to 134.73 Japanese yen from 134.12 yen. The euro fell from $1.0975 to $1.0951.
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