TOKYO (AP) – Asian shares were trading mixed on Wednesday after falling on Wall Street following a weaker-than-expected report on the U.S. economy.
Japan’s benchmark Nikkei 225 was down 1.7% at 27,808.75 in afternoon trade. Australia’s S&P/ASX 200 was little changed, ending less than 0.1% at 7,232.60. South Korea’s Kospi rose 0.5% to 2,493.83. Businesses in Hong Kong and Shanghai were closed for the Qingming Festival holiday.
New Zealand’s benchmark fell 0.3% after the central bank surprised economists by implementing an aggressive half-point rate hike to bring its policy interest rate down to 5.25%. It was the Reserve Bank of New Zealand’s 11th straight rate hike as it tries to tame inflation, which is running at 7.2%, about 2% above the bank’s target level.
Central banks have shown some divergence in adjusting interest rates to reflect the latest trends in their economies. On Tuesday, Australia’s central bank kept its rate at 3.6%, citing the need for time to assess which direction the economy is headed as inflation softens.
On Wall Street, the S&P 500 fell 0.6% to 4,100.60, snapping a four-day winning streak. The Dow Jones Industrial Average fell 0.6% to 33,402.38. The Nasdaq Composite closed down 0.5% at 12,126.33.
Investors are still divided over whether the US economy will slide into recession and how badly corporate profits could fall. The biggest question remains what the Federal Reserve will do next with interest rates after raising them heavily over the past year to bring high inflation under control.
Reports of job openings and factory orders released on Tuesday could fuel fears of a recession. But they could also give the Fed a reason to hold rates steady at its next meeting, for the first time in more than a year, while offering a potential buoyancy for markets.
A report showed employers advertised 9.9 million job openings in February, a sharper decline than economists had expected. The Fed is paying close attention to the numbers because the job market has remained so strong despite higher rates. The expectation is that the softening in the number of openings could put some pressure on inflation without putting many out of work.
A separate report showed factory orders in February were weaker than economists expected.
A potentially more impressive report will come with Friday’s update on how many jobs were created nationwide last month.
Traders bet on the Fed keeping rates steady at its meeting next month. The day before, a slight majority was betting on another hike in rates. This helped in falling yields in the bond market.
The yield on the 10-year Treasury fell to 3.34% from 3.42% late Monday. It helps set rates for mortgages and other important loans. The two-year Treasury, which moves higher on expectations for the Fed, fell to 3.82% from 3.97%.
In the longer term, there appears to be more confidence on Wall Street that the Fed will have to cut rates later this year.
Tuesday’s weaker-than-expected reading on the economy follows a report on Monday that showed US manufacturing shrinking faster than economists had forecast.
On Wall Street, Virgin Orbit shares fell 23.2% to 15 cents after the company filed for Chapter 11 bankruptcy protection. It is grappling with the fallout of a failed mission this year and increasing difficulty raising funds for future missions.
Shares of industries whose profits are closely tied to the economy’s strength fell more than the rest of the market, including industrial and energy companies. Valero Energy fell 8% for one of the biggest losses in the S&P 500.
In other trading Wednesday, benchmark US crude rose 33 cents to $81.04 a barrel in electronic trading on the New York Mercantile Exchange. It rose 29 cents to $80.71 a barrel on Tuesday. Internationally, Brent crude rose 40 cents to $85.34 a barrel in London.
The US dollar slipped to 131.52 JPY from 131.71 yen. The euro moved up from $1.0951 to $1.0954.
Yuri Kageyama, The Associated Press