Tokyo, April 6 (BNA): Most Asian shares fell on Thursday as investors turned their attention to upcoming earnings reports and other economic indicators.
Japan’s Nikkei 225 fell 1.1% in morning trade, to 27,507.65. Australia’s S&P/ASX 200 fell 0.3% to 7,214.90. South Korea’s Kospi Index fell about 0.8% to 2,476.08. Hong Kong’s Hang Seng was almost unchanged, rising less than 0.1% to 20,277.01. The Shanghai Composite fell less than 0.1%, to 3,312.22.
While efforts to cool inflation by raising interest rates are meant to slow overheating economies, the concern is that central bank policymakers may overdo it, leading to a recession, according to the Associated Press (AP).
Many regional economies are experiencing weak exports due to weak demand in key markets such as the United States. This has cushioned the impact of the recovery in China as its economy recovers from disruptions related to the pandemic.
Stocks on Wall Street mostly fell on Wednesday after recent signs that the US economy is slowing under the weight of higher interest rates.
“Wall Street knows you need a strong economy to keep stocks rising,” Edward Moya of OANDA said in a comment. “It is clear that the US economy is slowing and the outlook should be for further labor market weakness.”
The S&P 500 fell 0.2% to 4,090.38 and the Dow Jones Industrial Average rose 0.2% to 33,482.72. But the Nasdaq Composite fell 1.1%, to 11,996.86.
One report from the Institute for Supply Management said that growth in the US service sector slowed last month more than economists expected, as the pace of new orders slowed. A separate report indicated that employers in the private sector added 145,000 jobs in March, down sharply from 261,000 jobs in February. Perhaps most importantly for markets, wage increases also erode workers, according to the ADP think tank.
“The March payroll data is one of several signs of a slowing economy,” said Nella Richardson, chief economist at ADP. “Employers are pulling back from a year of strong hiring and wage growth, after a three-month plateau, is easing.”
The ADP Special Payrolls Report can provide a preview of what the most comprehensive jobs report released by the US government will show on Friday. Economists expect employers to say they added 240,000 jobs last month, down from 311,000 in February.
If the job market is really slowing from the strong growth that has helped prop up the larger economy lately, this could present reason for the Federal Reserve to pause its interest rate increases.
This is a big deal for the markets not only because it could reduce the odds of an upcoming recession, which some economists already see as a big possibility. Higher rates also affect the prices of stocks, bonds and other investments.
Other reports on the economy this week also came in weaker than expected, including readings on the number of job vacancies across the country and the health of the manufacturing sector.
The reports had traders raising bets for the Fed to keep interest rates steady at its next meeting in May, which will be the first time that has happened in over a year. Many traders are also betting that the Fed will have to cut interest rates later this year, something that could act as a stimulant for the markets.
Despite this, the Fed has consistently said that it does not expect to cut interest rates this year.
On the winning side on Wednesday was Johnson & Johnson, which rose 4.5% after it proposed paying nearly $9 billion to cover claims that baby powder containing talcum powder causes cancer. It was one of the biggest drivers of the Dow Jones Industrial Average’s gains on Wednesday.
In the bond market, the yield on the 10-year Treasury fell to 3.30% from 3.34% late Tuesday. Helps set rates for mortgages and other loans. The two-year yield, which tends to move further based on Fed expectations, fell to 3.80% from 3.82%.
Gold was relatively stable and fell by $2.60 to settle at $2035.60 an ounce. It rose more than 11% on concerns about the strength of the global banking system.
In other dealings, US benchmark crude fell 69 cents to $79.92 a barrel in electronic trading on the New York Mercantile Exchange. It lost 10 cents to $80.61 on Wednesday. Brent crude, the international benchmark, fell 72 cents to $84.27 a barrel.
The US dollar fell to 131.16 yen from 131.30 yen. The price of the euro reached $1.0888, down from $1.0908.
HF