Share Market: Asian shares were mostly lower on Friday due to rising concerns over US banks and a slowdown in demand from China, a key driver of the region’s growth.
“Asian equities were struggling for direction following weak inflation data in China,” said Stephen Innes, managing partner at SPI Asset Management.
He said recent data showed very low inflation and weak credit expansion in China, all of which point to slower growth as the country’s initial jump in easing pandemic-related restrictions fades.
Japan’s benchmark Nikkei 225 rose 0.9 per cent to 29,393.24 in morning trade as companies such as Nissan Motor Co gave up gains after reporting relatively favorable earnings. But SoftBank Group Corp slumped after posting losses for the second year in a row.
Australia’s S&P/ASX 200 closed down 0.1 percent at 7,244.50. South Korea’s Kospi fell 0.4 percent to close at 2,481.40. Hong Kong’s Hang Seng was virtually unchanged at 19,746.09, while the Shanghai Composite was down 0.1 percent at 3,304.87.
A surprisingly sharp decline for The Walt Disney Co., after reporting that it lost streaming subscribers weighed on shares on Wall Street last quarter. The S&P 500 closed down 7.02 points, or 0.2 percent, at 4,130.62, with two out of three shares in the index falling. The Dow Jones Industrial Average was down 221.82, or 0.7 percent, at 33,309.51, while the Nasdaq Composite was up 22.07, or 0.2 percent, at 12,328.51.
Investors are hunting for the next potential victim in the US banking industry after higher interest rates helped spur three high-profile failures since March.
Helping limit losses for the overall market was a report that US inflation at the wholesale level cooled slightly last month than economists expected. This followed a report the previous day which showed that inflation at the consumer level was also behaving largely as forecast.
The report helped confirm expectations on Wall Street that the Federal Reserve would hike interest rates again at its next meeting in June. This would be the first time that has happened in more than a year.
A separate US report said more workers applied for unemployment benefits last week than expected. That’s bad news for workers and adds to concerns about a possible recession because the job market has been one of the main pillars driving the economy.
But a cooling labor market would also bring a windfall to the Fed, which fears that a too-warm job market could exert upward pressure on inflation. Following the reports, Treasury yields fell on expectations for a less aggressive Fed. Traders are betting on the high probability that the Fed will have to cut interest rates later this year. A rate cut acts like a steroid for financial markets, but only when the economy is in the throes of a recession and needs such a stimulus.
For banks, there is widespread concern that industry troubles could lead to a reduction in lending, which would hurt the economy. As the US government approaches a June 1 deadline, it could run out of cash unless Congress allows it to borrow more. Economists say the resulting default on US government debt could be disastrous for the economy.
The yield on the 10-year Treasury fell to 3.39 percent from 3.44 percent late Wednesday. It helps set rates for mortgages and other important loans. The two-year Treasury yield, which trades higher on Fed expectations, fell to 3.90 percent from 3.91 percent.
In energy trading, benchmark US crude rose 30 cents to $71.17 a barrel. International Brent crude rose 23 cents to $75.21 a barrel.
In currency trade, the US dollar was flat at 134.52 Japanese yen. The euro is priced at $1.0922, higher from $1.0921.
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