Tag: Japanese yen

US stocks slip as Target stumbles, weighs on retailers

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NEW YORK — Stocks fell in afternoon trading on Wall Street Wednesday as investors reviewed a dismal financial report from Target and a broader update on the retail sector from the government.

The S&P 500 fell 0.5% as of 12:01 p.m. Eastern. The Dow Jones Industrial Average rose 56 points, or 0.2%, to 33,645 and the Nasdaq fell 1.2%.

Retailers weighed heavily on the market. Target slumped 11.8% after cutting its forecasts for the holiday season following a surprisingly big drop in its third-quarter profits. Auto parts retailer Advance Auto Parts fell 17.4% after reporting weak financial results.

Macy’s, which reports its financial results on Thursday, fell 8.2%.

Big technology companies also fell. Chipmaker Micron slipped 5.6% after announcing some production cuts because of weak demand. Nvidia fell 3.1%.

Wall Street has been closely watching the latest economic updates, including reports that consumer and wholesale prices continue to cool. Much of the market’s prior rally was due to hopes inflation is easing, which could portend less aggressive hikes for interest rates from the Federal Reserve.

The Fed has been raising interest rates in an effort to slow the economy and tame the hottest inflation in decades. Wall Street is worried that it could hit the brakes too hard on economic growth and bring on a recession.

The latest government report on retail sales for October shows that consumer spending remains strong, though it’s unclear whether that’s because of more purchases or higher prices.

Strong consumer spending is typically a good sign for the economy, but it could make the Fed’s strategy of cooling the economy more difficult. The central bank has already hiked its key overnight rate up to a range of 3.75% to 4% from virtually zero earlier this year. It has said it still plans to hike rates further and then to hold them at that high rate for a while in order to grind down inflation.

“The better-than-expected retail sales results don’t bolster the case that the Fed” can ease up on its campaign to slow the economy with high interest rates, said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management.

He said resilient consumer spending could improve the possibility that the Fed manages to pull off a so-called “soft landing” with its strategy. That would involve taming inflation without throwing the economy into a recession, or at least avoiding a damaging recession.

Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.73% from 3.78% from late Tuesday. The yield on the two-year Treasury rose to 4.37% from 4.35% from late Tuesday.

Wall Street is also closely watching developments in Russia’s war against Ukraine. Tensions appear to have receded slightly after NATO member Poland and the head of the military alliance both said Wednesday there is “no indication” that a missile that came down in Polish farmland, killing two people, was an intentional attack. Air defenses in neighboring Ukraine likely launched the Soviet-era projectile to fend off a Russian assault that savaged its power grid, they said.

“There is nothing, absolutely nothing, to suggest that it was an intentional attack on Poland,” said Polish President Andrzej Duda.

Markets in Europe fell.

The conflict is hanging over the energy market. A worsening war in Ukraine could cause spikes in prices for oil, gas and other commodities that the region produces. U.S. crude oil prices rose 2.7%.

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Yuri Kageyama and Matt Ott contributed to this report.

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November 16, 2022
Asian benchmarks mixed as markets eye COVID, inflation risks

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TOKYO — Asian shares were mixed in Monday trading as momentum faded from last week’s rally on Wall Street amid varied sentiments about coronavirus restrictions easing in China and global interest rate increases.

Benchmarks fell in Japan and South Korea, while rising in China. Analysts say some investors are being cheered by signs inflation is abating in the U.S. earlier than initially thought, while they warn factors remain that could refuel inflation, including geopolitical risks.

“But it is far too hasty to declare a decisive conclusion to inflation risks,” said Venkateswaran Lavanya at Mizuho Bank.

Japan’s benchmark Nikkei 225 slipped 0.8% in morning trading to 28,047.58. Australia’s S&P/ASX 200 was little changed, inching up less than 0.1% to 7,163.10. South Korea’s Kospi lost 0.2% to 2,479.52. Hong Kong’s Hang Seng jumped 2.1% to 17,688.84, while the Shanghai Composite rose 0.4% to 3,099.19.

“We also have the Democrats holding the Senate while the Republicans look likely to control the House. Policy paralysis at a time of economic crisis is not a good look for what may lay ahead over the next two years. The current stock rally may have only days to run,” said Clifford Bennett, chief economist at ACY Securities, referring to the U.S. midterm election results.

Wall Street closed last week with a rally, amid hopes inflation pressures had eased. That would make the Federal Reserve less likely to keep raising interest rates. But some analysts said the Wall Street rally was overdone.

The S&P 500 rose 36.56 points, or 5.5%, for its best day in more than two years, to 3,992.93. Its 5.9% gain for the week was its third in the last four and its biggest since June.

The Dow rose 32.49, or 0.1%, to 33,747.86, and the Nasdaq climbed 209.18, or 1.9%, to 11.323.33. Both also notched hefty gains for the week.

Markets are getting a boost from China’s relaxing some of its strict anti-COVID measures, which have been hurting the world’s second-largest economy. Easing of restrictions translates to potentially more growth in China, a definite plus for the Asian region.

A report last week showed inflation in the United States slowed by more than expected last month. The Fed has already lifted its key overnight interest rate to a range of 3.75% to 4%, up from basically zero in March. The likely scenario is still for further hikes into next year.

In energy trading, benchmark U.S. crude gained 22 cents to $89.18 a barrel. U.S. crude gaining 2.9% to $88.96 per barrel Friday. Brent crude, the international standard, added 29 cents to $96.28 a barrel.

In currency trading, the U.S. dollar rose to 139.20 Japanese yen from 138.76 yen. The euro cost $1.0391, down from $1.0356.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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November 13, 2022
Asian stocks surge after lower US inflation eases rate fears

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BEIJING — Asian stock markets surged Friday after U.S. inflation eased by more than expected, spurring hopes the Federal Reserve might scale down plans for more interest rate hikes.

Hong Kong’s market benchmark jumped 5.7% and Seoul rose 3.3%. Shanghai, Tokyo and Sydney advanced. Oil prices edged higher.

Wall Street’s benchmark S&P 500 index soared 5.5% on Thursday for its biggest one-day gain in 2 1/2 years after the government reported consumer prices rose 7.7% over a year ago in October. That was lower than the 8% expected by economists and the fourth month of decline.

The announcement “drove a ‘more dovish’ calibration of interest rate expectations,” said Yeap Jun Rong of IG in a report.

The Fed and central banks in Europe and Asia are raising rates to cool inflation that is at multi-decade highs. Investors worry that might tip the global economy into recession. They hope lower inflation might prompt the Fed to ease off plans for more increases.

Forecasters warned Thursday it was too early to be certain prices are under control. Fed officials have said rates might have to stay elevated for some time.

Hong Kong’s Hang Seng index soared to 16,994.66 and the Nikkei 225 in Tokyo gained 2.9% to 28,229.68.

The Shanghai Composite Index added 1.4% to 3,078.42 after the ruling Communist Party promised to alter quarantine and other anti-virus tactics to reduce the cost of China’s severe “zero-COVID” strategy that has disrupted the economy.

The Kospi in Seoul rose to 2,481.50 and Sydney’s S&P-ASX 200 was up 2.7% at 7,154.20.

India’s Sensex opened up 1.6% to 61,579.12. New Zealand and Southeast Asian markets advanced.

On Wall Street, the S&P 500 gained to 3,956.37, propelled by big gains for tech heavyweights. Amazon soared 12.2%, Apple rose 8.9% and Microsoft climbed 8.2%.

The Dow Jones Industrial Average gained 3.7%, or more than 1,200 points, to 33,715.37.

The Nasdaq composite, dominated by tech stocks, shot up 7.4% to 11,114.15 for its best day since March 2020, when Wall Street was rebounding from a crash at the start of the coronavirus pandemic.

Investors were reassured that U.S. inflation was declining from its June peak of 9.1%, though forecasters said the Fed’s campaign to cool price rises was far from over.

Traders expect the Fed to raise its benchmark lending rate in December but by a smaller margin of half a percent following four increases of 0.75 percentage points, triple its usual margin. That benchmark stands at a range of 3.75% to 4%, up from close to zero in March.

The Fed is trying to slow economic activity to reduce pressure for prices to rise.

The latest figures are a sign the Fed is “on the right path,” but it will face “a lot of variables” over the next few quarters, said Edward Moya of Oanda in a report. He said the benchmark rate could be raised to 5% and “if inflation proves to be sticker, it could be as high as 5.50%.”

Core inflation, which strips out volatile food and energy prices and is more closely watched by the Fed, was 6.3% over a year earlier, down from September’s 6.6% and below the consensus forecast of 6.5%. Core prices rose 0.3% month on month, half of September’s 0.6% gain.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82% from 4.15%. The two-year yield, which more closely follows expectations for Fed action, fell to 4.32% from 4.62% and was on pace for its sharpest fall since 2008.

In energy markets, benchmark U.S. crude gained 20 cents to $86.67 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 64 cents to $86.47 on Thursday. Brent crude, the price basis for international oil trading, advanced 20 cents to $93.87 per barrel in London. It rose $1.02 to $93.67 the previous session.

The dollar declined to 141.52 yen from Thursday’s 141.83 yen. The euro edged up to $1.0206 from $1.0180.

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November 10, 2022
Asian markets mixed ahead of US elections, inflation data

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TOKYO — Asian stocks were mixed Tuesday ahead of the U.S. midterm elections with trading likely to stay bumpy in a week that brings new inflation data and other events that could shake markets.

Tokyo’s Nikkei 225 gained 1.3% to 27,876.20 on strong earnings reports. The Kospi in Seoul advanced 1.1% to 2,397.41 and Australia’s S&P/AXS 200 gained 0.4% to 6,958.90.

Hong Kong’s Hang Seng sank 0.6% to 16,488.44, while the Shanghai Composite index shed 0.8% to 3,052.93. Thailand’s SET gained 0.7%. India’s markets were closed for a holiday.

The week is full of potentially market-moving events, including U.S. inflation data and the election, which could leave the U.S. government split between Democrats and Republicans.

For Tuesday, at least, “Look for markets to trade political headline spin rather than substance,” Stephen Innes of SPI Asset Management said in a commentary.

Every seat in the U.S. House of Representatives is up for election this year, along with about a third of the U.S. Senate. On the line is control of both houses of Congress, currently under Democratic leadership.

Voters are also electing governors in most of the states this year. They’ll be in office in 2024 when the next presidential election happens and could affect election laws or vote certifications. Many state legislative and local authorities also are on the ballot.

A divided government would likely bring gridlock rather than big, sweeping policy changes that could upset tax and spending plans. Historically, when a Democratic White House has shared power with a split or Republican Congress, stocks have seen stronger gains than usual.

On Monday, the benchmark S&P 500 rose 1% to 3,806.80 while the Dow Jones Industrial Average gained 1.3% to 32,827.00 and the Nasdaq composite added 0.9% to 10,564.52.

Analysts say a strong performance by Democrats in the elections could lead to increased spending to help the economy that might fuel inflation and leave the Federal Reserve obliged to continue to hike interest rates to get prices under control.

It may take a while to get clarity because of the process to count votes that came in through the mail.

Economists expect a report Thursday to show the consumer price index rose 8% in October from a year earlier, slightly lower than September’s 8.2% inflation rate.

Regardless of the outcome of Tuesday’s vote, “It is still all about inflation and while this report might not be as hot as the last few, it still should show that rents and the core-service sector part of the economy are still hot,” Edward Moya of Oanda said in a report.

Higher rates put the brakes on the economy by making it more expensive to buy a house, car or anything else on credit, though they take time to take effect. Rate hikes could bring a recession, and they tend to drag on prices for stocks and other investments.

A fourth straight month of moderating inflation from June’s 9.1% rate could afford the Federal Reserve leeway to loosen up a bit. The Fed has said that it may soon dial down the size of its increases to half a percentage point, after pushing through four straight mega increases of three-quarters of a point.

Monday’s gains for Wall Street came despite a shaky showing for its most influential stock. Apple rose 0.4% after dropping earlier in the day. It had warned customers they’ll have to wait longer to get the latest iPhones after anti-COVID restrictions were imposed on a contractor’s factory in China.

Earnings reports are also causing share prices to swing.

The reporting season for summertime profits is roughly 85% done, and S&P 500 companies are on track to deliver growth of a little more than 2%. Analysts are forecasting a drop in S&P 500 profits for the final three months of the year, of nearly 1.5%. They had been forecasting growth of 4% at the end of September.

In other trading, U.S. benchmark crude oil lost 50 cents to $91.29 per barrel in electronic trading on the New York Mercantile Exchange. It lost 82 cents to $91.79 per barrel on Monday.

Brent crude, the international pricing standard, gave up 45 cents to $97.47 per barrel.

The U.S. dollar was unchanged at 146.63 yen. The euro slipped to $1.0008 to $1.0016.

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November 7, 2022
Japan Cabinet OKs $200B spending plan to counter inflation

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TOKYO — Japanese Prime Minister Fumio Kishida’s government approved Friday a hefty economic package that will include government funding of about 29 trillion yen ($200 billion) to soften the burden of costs from rising utility rates and food prices.

Kishida was set to give a news conference in the evening.

Inflation has been rising in Japan along with globally surging prices. A weakening of the yen against the dollar has amplified costs for imports.

The stimulus package includes subsidies for households that are largely seen as an attempt by Kishida to lift his plunging popularity. His government has been rocked by the ruling Liberal Democratic Party’s close ties to the South Korean-based Unification church, which surfaced after the assassination of former leader Shinzo Abe in July.

“We will make sure to deliver the measures to everyone and do our utmost so that people can feel supported in their daily lives,” Kishida said after preliminary approval of the package earlier in the day.

Any market reaction to another flood of stimulus was likely already taken into account earlier in the week as share prices fell in Tokyo, with the benchmark Nikkei 225 losing 0.9% to 27,105.20.

Japan has stuck to using fiscal measures, or government spending, to counter current economic challenges. While central banks around the world are raising interest rates aggressively to try to tame decades-high inflation, Japan’s inflation rate is a relatively moderate 3% and the greater fear is that the economy will stall, not overheat.

The Bank of Japan, which has kept its benchmark rate at minus 0.1% since 2016, kept its longstanding lax monetary policy at a policy making meeting that wrapped up on Friday.

In doing so, it runs the risk of seeing the yen weaken further since the Federal Reserve is still raising rates, which tends to push the dollar higher. That in turn will raise prices in Japan since it imports much of what it consumes.

The overall size of the package, including private-sector funding and fiscal measures, is expected to amount to 71.6 trillion yen ($490 trillion), Kishida said.

The plan includes about 45,000 yen ($300) subsidies for household electricity and gas bills and coupons worth 100,000 yen ($680) for women who are pregnant or rearing babies.

The 29 trillion yen ($200 billion) spending package will be part of a supplementary budget that still must be approved by the parliament.

Kishida vowed to compile and submit a budget plan and get it approved as soon as possible.

His support ratings have sunk since July amid public criticisms over his Liberal Democratic Party’s longstanding cozy ties with the Unification Church, which is accused of brainwashing adherents into making huge donations, causing financial hardships and breaking up families.

An LDP internal survey showed about half of its 400 lawmakers were tied to the church, though not as followers. Kishida’s economy minister, Daishiro Yamagiwa, was obliged to resign earlier this week because of his ties with the church and failure to explain them. He was replaced by former health minister Shigeyuki Goto.

The hefty spending package will require issuing of more government bonds, further straining Japan’s worsening national debt that has piled up as the government spent heavily to counter the impact of the pandemic. Japan now has a long-term debt exceeding 1.2 quadrillion yen ($8.2 trillion), or more than 200% of the size of its economy.

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October 28, 2022
Stocks end higher on Wall Street as earnings roll in

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NEW YORK — Wall Street notched more gains Tuesday, as major stock indexes rallied for the third day and Treasury yields fell again.

The S&P 500 rose 1.6%, with roughly 90% of stocks in the index notching gains. The benchmark index hadn’t been able to string together more than two gains in a row since mid-September.

The Dow Jones Industrial Average rose 1.1% and the Nasdaq closed 2.3% higher. Smaller company stocks outpaced the broader market, lifting the Russell 2000 index 2.7% higher.

The latest gains came as bond yields fell significantly, reflecting speculation among investors that the Federal Reserve may begin easing up on its aggressive pace of interest rate increases as soon as this year.

The yield on the 10-year Treasury, which impacts mortgage rates, slipped to 4.09% from 4.23% late Monday. The yield on the two-year Treasury, which tracks Federal Reserve action, fell to 4.45% from 4.50% late Monday.

“It seems like the market is saying that they think perhaps longer-term yields have peaked, and that’s providing some optimism to the (stock) market,” said Randy Frederick, managing director of trading & derivatives at Charles Schwab.

The S&P 500 rose 61.77 points to 3,859.11. The Dow added 337.12 points to close at 31,836.74. The Nasdaq gained 246.50 points at 11,199.12. The Russell 2000 picked up 47.76 points, closing at 1,796.16.

Technology stocks, retailers and communication companies were among the biggest drivers of Tuesday’s rally. Traders were sizing up a heavy round of earnings reports from big U.S. companies.

General Motors rose 3.6% after delivering solid results. United Parcel Service initially rose, but then slipped 0.3% after the package delivery service beat Wall Street’s third-quarter earnings and revenue forecasts. Paint maker Sherwin-Williams jumped 3.6% after also reporting solid financial results.

Packaging maker Crown Holdings fell 16.8% after its latest earnings fell short of estimates. Industrial conglomerate General Electric fell 0.5% after reporting weak third-quarter earnings.

Many other big names are on deck to report earnings throughout the week. Boeing, Ford and Facebook’s parent company will report results on Wednesday. Caterpillar, Apple and Amazon are among the big companies reporting results on Thursday.

Outside of earnings, barbecue grill maker Weber soared 30.4% after it said BDT Capital Partners is interested in buying the rest of the company. Adidas fell 2.4% after the German sportswear company ended its partnership with the rapper formerly known as Kanye West over his offensive and antisemitic remarks.

The latest round of earnings reports are particularly important for investors looking for indications of inflation’s impact on various industries. Prices on everything from clothing to food remain at their highest levels in four decades, putting pressure on companies to raise prices and cut costs, while squeezing consumers.

The Federal Reserve and central banks around the world have been raising interest rates to tame inflation. That has investors concerned about the central bank going too far in trying to slow the economy and instead causing a recession.

The Fed is expected to raise interest rates another three-quarters of a percentage point at its upcoming meeting in November. But traders have grown more confident that the Fed will dial down to a more modest increase of 0.50 percentage points in December, according to CME Group.

Markets have been looking for any sign that the central bank is ready to ease up on rate increases. That includes data that the economy is slowing.

A measure of home prices released on Tuesday showed that the housing market continues to cool. The S&P CoreLogic Case-Shiller Index, which tracks prices in major cities, fell more than expected in August. The Fed’s aggressive interest rate increases have been making borrowing more expensive, in turn driving mortgage rates higher and crimping the broader housing market.

The U.S. economy is already slowing down and actually contracted during the first half the year. The government will release its third-quarter gross domestic product report on Thursday.

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Elain Kurtenbach, Matt Ott and Joe McDonald contributed to this report.

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October 25, 2022
Global shares mixed after China economy slows, HK down 6.4%

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TOKYO — Global shares were mixed, while Hong Kong’s benchmark plunged 6.4% on Monday as dismay over a lack of fresh policy initiatives from a Chinese Communist Party congress overshadowed a report that the No. 2 economy grew at a faster pace in the last quarter.

The dollar rose to nearly 150 yen, a day after the Japanese central bank reportedly again moved to stem the yen’s decline.

Britain’s FTSE 100 slipped 0.7% to 6,918.15 after former Prime Minister Boris Johnson announced he will not run to lead the Conservative Party. Former Treasury chief Rishi Sunak is now the favorite to replace Liz Truss, who quit last week after her tax-cutting economic package caused turmoil in financial markets.

France’s CAC 40 rose nearly 0.6% in early trading to 6,068.71. Germany’s DAX added 0.6% to 12,807.23. The future for the Dow industrials was down 0.4% and that for the S&P 500 shed 0.5%.

Beijing’s report that the Chinese economy gained momentum in the last quarter was better than expected and up from the previous quarter’s 0.4%, but that was among the slowest expansions in decades as the country wrestled with repeated closures of cities to fight virus outbreaks.

There were no new market-boosting initiatives from the Communist Party congress, where Xi Jinping, the most powerful leader in decades, gained a free hand in setting policy. The ruling party named a seven-member Standing Committee made of Xi’s allies and dropped supporters of free enterprise like Premier Li Keqiang, the party’s No. 2 before the party’s once in five years congress.

Xi wants a bigger Communist Party role in business and technology development. That has prompted warnings tighter control of entrepreneurs who generate jobs and wealth will depress growth that already was in long-term decline.

The 6.4% plunge in Hong Kong’s Hang Seng index, to 15,180.69, took it to its lowest level since 2006.

The Shanghai Composite index shed 2.0% to 2,977.56.

Xi also gave no sign of plans to change the severe “zero-COVID” strategy that has crimped business and trade. He indicated no changes in policies straining relations with Washington and Asian neighbors.

Japan’s benchmark Nikkei 225 added 0.3% to finish at 26,974.90. Australia’s S&P/ASX 200 gained 1.5% to 6,779.40. South Korea’s Kospi gained 1.0% to 2,236.16.

Wall Street ended last week with a broad rally, with technology stocks, retailers and health care companies powering a big share of the gains.

The S&P 500 rose 2.4%, notching a weekly gain of 4.7%, its biggest such gain since June. The Dow climbed 2.5% and the Nasdaq composite added 2.3%. The Russell 2000 index rose 2.2%.

Investors have been focusing on corporate earnings as they search for clues about how inflation and rising interest rates are shaping global economies.

The Federal Reserve is expected to raise interest rates another three-quarters of a percentage point at its meeting in November. That’s triple the size of the Fed’s usual move.

In currency trading, the U.S. dollar rose to 149.28 Japanese yen from 147.65 yen. The Bank of Japan was reported to have intervened Friday to prop up the yen after the dollar rose above the 150 yen level. The dollar fell after the reported intervention but bounced back.

The euro cost 98.25 cents, down from 98.62 cents.

The dollar has gained in strength as the U.S. Federal Reserve has raised interest rates to fight inflation. Its growing strength against the yen and other currencies has added to inflationary pressures in those countries by pushing up the costs of imports and of debt repayments.

In energy trading, benchmark U.S. crude fell $1.32 to $83.73 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, declined to $1.29 to $92.21 a barrel.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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October 24, 2022
Asian shares mixed as markets eye China meeting

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TOKYO — Asian shares were mixed Monday as investors kept their eyes on the weeklong Communist Party congress in China.

Benchmarks dropped in Tokyo, Sydney and Hong Kong, but they recovered in afternoon trading in Seoul and Shanghai. Mumbai gained. Oil prices and U.S. futures rose.

The meeting in China, which opened Sunday, is expected to reappoint Xi Jinping as leader for the next five years, reaffirming his grip on power and stronger state control over the economy. Analyst expect no change to the “zero-COVID policy.”

“Fresh updates from China’s Party Congress are being scrutinized, with the emphasis on technological advancement and national security seemingly brought up as high priorities for China’s longer-term direction. Further de-coupling f rom U.S. technology seems to be the story,” said Yeap Jun Rong, market strategist at IG in Singapore.

Japan’s benchmark Nikkei 225 slipped 1.2% in afternoon trading to 26,775.79. Australia’s S&P/ASX 200 dipped 1.4% to 6,664.40. South Korea’s Kospi rebounded to gain 0.3% to 2,219.71. Hong Kong’s Hang Seng lost 0.2% to 16,561.97, while the Shanghai Composite rose 0.5% to 3,086.38. In Mumbai, the Sensex gained 0.5%.

Clifford Bennett, Chief Economist at ACY Securities, noted the U.S. dollar will likely continue to rise as interest rates are pushed higher to counter inflation.

“The outlook is grim. The economic horizon is dark,” he said of the American economy. “”The U.S. dollar will continue to strengthen for the moment, particularly against other Western currencies.”

In currency trading, the euro cost 97.37 cents, up from 97.21 cents.

The U.S. dollar rose to 148.74 Japanese yen from 148.63 yen. That’s a nearly 32-year low for the yen against the dollar.

Japan’s industrial production for August showed moderate signs of improvement, the government said. Industrial production rose 3.4% from the previous month, and 5.8% from the previous year, according to Ministry of Economy, Trade and Industry data released Monday.

Worries about inflation, though cooling in some parts of the economy around the world, remain overall. On Wall Street, stocks ended last week with a broad slide, wiping out earlier gains.

A report showing U.S. consumers’ expectations for inflation was another signal the Federal Reserve may keep aggressively raising interest rates, although that strategy raises the risks of a recession.

The S&P 500 fell 2.4% on Friday. The Dow Jones Industrial Average fell 1.3% and the Nasdaq composite ended 3.1% lower. Both indexes also turned lower after marching higher in early trading.

The Russell 2000 gave up 2.7%

The Fed has already raised its benchmark interest rate five times this year, with the last three increases by three-quarters of a percentage point. Wall Street expects another raise of three-quarters of a percentage point at its next meeting in November.

Investors have also been focusing on the latest earnings reports.

In energy trading, benchmark U.S. crude added 66 cents to $86.27 a barrel in electronic trading on the New York Mercantile Exchange. U.S. crude oil prices fell 3.9% on Friday. Brent crude, the international standard, added 78 cents to $92.41 a barrel.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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October 16, 2022
Closing prices for crude oil, gold and other commodities

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Benchmark U.S. crude oil for November delivery fell $3.50 to $85.61 a barrel Friday. Brent crude for December delivery fell $2.94 to $91.63 a barrel.

Wholesale gasoline for November delivery fell 7 cents to $2.63 a gallon. November heating oil fell 11 cents to $3.98 a gallon. November natural gas fell 29 cents to $6.45 per 1,000 cubic feet.

Gold for December delivery fell $28.10 to $1,648.90 an ounce. Silver for December delivery fell 85 cents to $18.07 an ounce and December copper fell 2 cents to $3.42 a pound.

The dollar rose to 148.68 Japanese yen from 147.17 yen. The euro fell to 97.25 cents from 97.85 cents.

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October 14, 2022
The yen may be weak, but Japan’s tourism isn’t expected to get a ‘bona fide’ rebound without Chinese visitors

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After more than two years of strict Covid-19 border controls, Japan reinstated visa-free travel to 68 countries on Tuesday.

Maki Nakamura | Digitalvision | Getty Images

The Japanese yen’s slump against the U.S. dollar has sparked some worry in Japan, but that could encourage more travelers to visit the country again, according to analysts — though they say a significant rebound in the tourism sector won’t happen without the return of Chinese tourists.

After more than two years of strict Covid border controls, Japan reinstated visa-free travel to 68 countries on Tuesday.

Package tours are no longer necessary, the Japan National Tourism Organization (JNTO) reported.

The daily entry limit of 50,000 people and the on-arrival PCR test at the airport have been scrapped. However, it is still mandatory for travelers from all countries and regions to submit a negative Covid test certificate or proof of vaccination, JNTO said.

With the easing of restrictions and the depreciating yen, tourism to the country will return quickly — especially from Asia, said Jesper Koll, director of financial services firm Monex Group told CNBC.

Koll said that although travelers from Europe and the U.S. are important in aiding Japan’s tourism recovery, “the bulk of the enthusiasm and the bulk of travel” still come from countries like Singapore, the Philippines and Thailand.

“The cheapness of the yen obviously increases the probability of tourism contributing greatly to the economy,” Koll said. “As the restrictions get rolled back further, and the capacity of inbound flights open up, I expect that we will see inbound spending and inbound tourism accelerate very, very quickly.”

In 2019, Japan welcomed 32 million foreign visitors and they spent about 5 trillion yen, but inbound spending is now only one-tenth of that, according to a Goldman Sachs note from September.

The investment bank estimated that inbound spending could reach 6.6 trillion yen ($45.2 billion) after a year of full reopening, as travelers will be encouraged to spend more because of the weak yen.

“Our ball-park estimation points to potentially larger inbound spending of ¥6.6 tn (annual) post full reopening versus the pre-pandemic level of ¥5 tn, partly helped by the weak yen,” the note said.

The Japanese currency plunged to a fresh 24-year low and was at 146.98 against the greenback during London’s trading hours on Wednesday.

Japanese officials intervened in the forex market in September when the dollar-yen hit 145.9.

“I don’t think the yen has been as cheap as it is now in living memory,” said Darren Tay, Japan economist at Capital Economics, said on CNBC’s “Squawk Box Asia” on Tuesday. “Tourists were already clamoring for borders to reopen … So I think the weak yen will serve as another motivating factor” for them to travel to Japan again.

Although flight ticket prices to Japan have increased since the announcement was made, tourists will still get a bang for their buck when they spend in Japan, Koll said.

“You can eat twice as many hamburgers, twice as much sushi for your dollar here in Japan compared to the United States, and even compared to the rest of Asia,” he added.

Chinese tourists ‘hold the key’

The outlook for Japan’s tourism recovery looks promising, but “the overall impact on Japan’s economy may not be a net positive” as Chinese tourists have yet to return, Tay said.

“Chinese tourists actually make up a large amount of what foreign tourists spent back in 2019 … They’re still pursuing a zero-Covid strategy so they won’t be returning anytime soon,” he said.

Goldman Sachs said Chinese tourists, who made up 30% of foreign visitors to Japan in 2019, could return only in the second quarter of 2023.

Once China fully reopens, inbound spending from Chinese visitors has the potential to increase from 1.8 trillion yen in 2019 to 2.6 trillion yen — 0.5% of Japan’s gross domestic product, said Yuriko Tanaka, economist at Goldman Sachs.

“Chinese visitors hold the key to a bona fide rebound in inbound spending,” Tanaka said.

Without visitors from China, it could take some time before inbound spending in Japan returns to pre-pandemic levels, Koll said. But strong demand from the rest of Asia could drive inbound spending to return “relatively quickly” to over $3 trillion by March 2023.

Outlook for yen

As markets expect the U.S. Federal Reserve to hike interest rates by 75 basis points in November, the yen will continue to weaken as the dollar continues to strengthen, said Koll.

“You’ve got the widening interest rate differential [between Japan and the U.S.], and the Federal Reserve is not done yet. There is at least one more interest rate hike in the cards,” he said.

He added that yen could weaken further toward the 155 level, strengthening only next spring — and that wouldn’t be the result of action from Japan, but of the Fed signaling that it has “stepped enough on the brake.”

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October 12, 2022
Asian stocks moving lower in wake of latest volatile session on Wall Street

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TOKYO (AP) — Asian shares were mostly lower on Wednesday following another volatile day on Wall Street, as traders braced for updates on inflation and corporate earnings.

Benchmarks fell in Tokyo
NIY00,
+0.09%,
Shanghai
SHCOMP,
-1.12%
and Hong Kong
HSI00,
-2.90%
but rose in Sydney.

South Korea’s Kospi
180721,
+0.34%
lost 0.1% to 2,189.86 after the Bank of Korea raised its key rate by 0.5 percentage point, amid the backdrop of Fed rate hikes in the U.S. and growing inflation risks from the weak won and rebounding global oil prices.

In currency trading the Japanese yen declined to a 24-year low against the U.S. dollar
JPYUSD,
-0.24
at 146 yen-levels, raising expectations of another intervention by Tokyo to prop up the yen. By midday the dollar
USDJPY,
+0.24%
was at 146.17 yen, up from 145.80 late Tuesday. The euro
EURUSD,
+0.12%
cost 96.96 cents, inching down from 97.07 yen.

The weaker yen raises costs for both consumers and businesses who rely on imports of food, fuel and other needs, but the bigger purchasing power for foreign currencies is expected to boost tourism. Japan reopened fully to individual tourist travel this week after being closed for more than two years because of the pandemic.

Japan’s benchmark Nikkei 225 lost 0.2% to 26,348.73 in morning trading. Australia’s S&P/ASX 200
ASX10000,
-1.54%
gained nearly 0.2% to 6,656.00. Hong Kong’s Hang Seng slipped 2% to 16,491.39, while the Shanghai Composite shed 1.2% to 2,943.24.

On Tuesday, the S&P 500
SPX,
-0.65%
fell 0.7%, marking its fifth straight loss, closing at 3,588.84. The Nasdaq
COMP,
-1.10%
dropped 1.1% to 10,426.19. The Dow Jones Industrial Average
DJIA,
+0.12%
added 0.1% to 29,239.19, while the Russell 2000 index
RUT,
+0.06%
rose 1 point, or about 0.1%, to 1,692.92.

Recession fears have been weighing heavily on markets as stubbornly hot inflation burns businesses and consumers. Economic growth has been slowing as consumers temper spending and the Federal Reserve and other central banks raise interest rates.

The International Monetary Fund on Tuesday cut its forecast for global economic growth in 2023 to 2.7%, down from the 2.9% it had estimated in July. The cut comes as Europe faces a particularly high risk of a recession with energy costs soaring amid Russia’s invasion of Ukraine.

See: Global economy most vulnerable since COVID crisis, with housing market at potential ‘tipping point,’ IMF warns

Wall Street is closely watching the Federal Reserve as it continues to aggressively raise its benchmark interest rate to make borrowing more expensive and slow economic growth. The goal is to cool inflation, but the strategy carries the risk of slowing the economy too much and pushing it into a recession.

“The market desperately wants a reason for the Fed to be able to stop tightening and the data recently hasn’t given them that opening with respect to inflation,” said Willie Delwiche, investment strategist at All Star Charts.

Computer-chip manufacturers continued slipping in the wake of the U.S. government’s decision to tighten export controls on semiconductors and chip manufacturing equipment to China. Qualcomm
QCOM,
-3.99%
fell 4%.

See: Intel reportedly plans to lay off thousands of workers, with details potentially emerging alongside quarterly earnings

Uber
UBER,
-10.42%
fell 10.4% and Lyft
LYFT,
-12.02%
slumped 12% following a proposal by the U.S. government that could give contract workers at ride-hailing and other gig economy companies full status as employees.

The Fed will release minutes from its last meeting on Wednesday, possibly giving Wall Street more insight into its views on inflation and next steps.

Investors still expect the Fed to raise its overnight rate by three-quarters of a percentage point next month, the fourth such increase. That’s triple the usual amount, and would bring the rate up to a range of 3.75% to 4%. It started the year at virtually zero.

Rex Nutting: Leading indicators show inflation is slowing, but Fed policy makers are too busy looking in rearview mirror to notice

The government will also release its report on wholesale prices Wednesday, providing an update on how inflation is hitting businesses. The closely watched report on consumer prices will be released on Thursday, and a report on retail sales is due Friday.

“Everyone is still hoping that every inflation report will be the one that shows that pressure is alleviating,” Delwiche said.

Wall Street is also gearing up for the start of the latest corporate earnings reporting season, which could provide a clearer picture of inflation’s impact.

Among the companies reporting quarterly results this week: PepsiCo
PEP,
+0.48%,
Delta Air Lines
DAL,
-1.97%
and Domino’s Pizza
DPZ,
-1.99%.
Banks including Citigroup
C,
-2.76%
and JPMorgan Chase
JPM,
-2.89%
will also report results.

In energy trading, benchmark U.S. crude
CL00,
-0.75%
lost 82 cents to $88.53 a barrel in electronic trading on the New York Mercantile Exchange. U.S. crude-oil prices fell 2% Tuesday. Brent crude
BRN00,
-0.56%,
the international pricing standard, fell 62 cents to $93.67 a barrel.

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October 11, 2022
Asian stock markets fall ahead of US employment update

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BEIJING — Asian shares followed Wall Street lower Friday ahead of U.S. jobs data investors hope will persuade the Federal Reserve to ease off plans for more interest rate hikes.

Tokyo and Hong Kong, the region’s biggest markets, retreated. Chinese markets were closed for a holiday. Oil prices were little-changed.

Wall Street’s benchmark S&P 500 index fell 1% on Thursday after a private sector report said U.S. employers hired slightly more workers than forecast in September. That gives ammunition to Fed officials who say more rate hikes are needed to cool the economy and rein in inflation that is at a four-decade high.

Investors were watching for Friday’s release of U.S. government data that are expected to show fewer people were hired compared with previous months. They hope that will help persuade the Fed five rate hikes this year are working and it can scale down plans for more.

“What the market seems to be crying out for is a Fed pivot,” said Robert Carnell of ING in a report. “For its part, the Fed is sticking to its ‘higher for longer’ mantra.”

The Nikkei 225 in Tokyo sank 0.6% to 27,149.75 and Hong Kong’s Hang Seng tumbled 1% to 17,823.29.

The Kospi in Seoul gained 0.2% to 2,241.87 while Sydney’s S&P ASX 200 shed 0.6% to 6,777.00.

New Zealand lost 0.2% while Singapore and Bangkok advanced.

The Fed and central banks around the world are focused on extinguishing inflation that is running at multi-decade highs, but investors worry their unusually large and rapid pace of rate hikes might tip the global economy into recession.

On Wall Street, the S&P 500 fell to 3,744.52. The index is up 4.4% for the week following its best two-day rally in 2 1/2 years.

The Dow Jones Industrial Average lost 1.1% to 29,926.94. The Nasdaq composite slid 0.7% to 11,073.31.

The yield on U.S. government debt, or the difference between market price and the payout at maturity, widened. That indicates traders expect more rate hikes.

The yield on the 10-year Treasury, which helps set rates for mortgages, rose to 3.81% from 3.75% late Wednesday. The yield on the two-year Treasury rose to 4.22% from 4.14% late Monday.

Strong U.S. hiring is positive for job hunters but a sign of enduring economic strength, which might make the Fed think more rate hikes are needed.

U.S. government data showed the number of applications for unemployment benefits hit a four-month high last week. That suggests the job market might be cooling.

Forecasters expect the government to report the economy added 250,000 jobs last month, well below the past year’s monthly average of 487,000 but still a strong number despite inflation and two straight quarters of U.S. economic contraction.

In energy markets, benchmark U.S. crude rose 2 cents to $88.47 per barrel in electronic trading on the New York Mercantile Exchange. The contract advanced 69 cents on Thursday to $88.45. Brent crude, the price basis for trading international oils, shed 4 cents to $94.38 per barrel in London. It rose $1.05 the previous session to $94.42.

The dollar declined to 144.92 yen from Thursday’s 145.07 yen. The euro gained to 98.11 cents from 97.94 cents.

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October 6, 2022
Hong Kong shares soar 6%, leading Asian market gains

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TOKYO — Hong Kong’s share benchmark soared more than 6% on Wednesday as Asian shares tracked gains on Wall Street.

New Zealand’s share benchmark rose 0.8% after its central bank hiked its benchmark interest rate to 3.5%, saying inflation remained too high and labor scarce. The half-point rate hike was the fifth in a row made by the Reserve Bank of New Zealand since February.

Statistics New Zealand said inflation was running at 7.3% and unemployment at 3.3%. The rate hike came on the same day the government announced its finances were in better shape than forecast.

The Hang Seng in Hong Kong rose 6.0% to 18,108.69, catching up with gains elsewhere as markets reopened following a holiday Tuesday. Markets in mainland China remained closed for a holiday.

Japan’s benchmark Nikkei 225 added 0.5% to 27,138.99. Australia’s S&P/ASX 200 climbed 1.7% to 6,815.70. Shares in Australia got a boost after the Reserve Bank of Australia ordered a smaller-than-expected 25 basis points interest rate hike on Tuesday.

South Korea’s Kospi gained 0.4% to 2,217.88.

Analysts said the latest data on South Korea’s inflation may push the Bank of Korea to raise interest rates at its meeting set for next week, but such hikes were expected to slow in pace as inflation is brought under control.

“We expect headline inflation to rise again in October. Gasoline prices will likely decline further, but city gas and power rates were raised at the beginning of October and fresh food prices will also probably rise ahead of winter,” said a report by Robert Carnell, regional head of research Asia-Pacific at ING.

On Wall Street, the Dow Jones Industrial Average climbed more 2.8% to 30,316.32. The S&P 500 had its best day since May 2020 on Tuesday as the market clawed back more of the ground it lost over the past miserable several weeks. It surged 3.1% to 3,790.93.

Twitter surged 22.2% after Elon Musk said he would go ahead with his $44 billion acquisition of the social media company, abandoning efforts to get out of the deal.

The Nasdaq composite climbed 3.3% to 11,176.41. Small company stocks also made solid gains, lifting the Russell 2000 advanced 3.9% to 1,775.77.

The two-day rally has hit markets as investors look for signs that central banks might ease up on aggressive rate hikes aimed at taming the hottest inflation in four decades. The rate hike by Australia’s central bank was smaller than previous ones.

In the U.S., a government report on job openings showed the number of available jobs in the U.S. plummeted in August compared with July. It’s a sign that businesses may pull back further on hiring and potentially cool chronically high inflation, which could allow the Federal Reserve to slow the pace of rate increases.

Investors are watching closely as central banks raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate hikes and the move by Australia’s central bank is a hopeful sign for some.

Investors worry that the rate hikes, especially the increases from the Fed, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.

Economic growth is already slowing globally and the U.S. economy contracted during the first two quarters of the year, which is considered an informal signal of a recession.

Wall Street will get a more detailed look at the employment situation in the U.S. this week, with a report on hiring by private companies due out Wednesday, the latest tally of weekly applications for unemployment benefits on Thursday and the government’s monthly jobs report for September on Friday.

In energy trading, benchmark U.S. crude fell 16 cents to $86.39 a barrel in electronic trading on the New York Mercantile Exchange. It surged $2.89 to 86.52 on Tuesday. Brent crude, the international standard for pricing, lost 8 cents to $91.72 a barrel.

In currency trading, the U.S. dollar rose to 144.19 from 144.12 Japanese yen. The euro cost 99.69 cents, down from 99.87 cents.

———

Damian J. Troise, Alex Veiga and Nick Perry contributed to this report.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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October 4, 2022
Asian shares rise after ‘relief rally’ on Wall Street

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TOKYO — Asian shares rose Tuesday, encouraged by a rally in U.S. shares after some weak economic data raised hopes that the Federal Reserve might ease away from aggressive interest rate hikes.

Japan’s benchmark Nikkei 225 added 2.8% in afternoon trading to 26,959.25. South Korea’s Kospi gained 2.5% to 2,209.98.

Australia’s S&P/ASX 200 jumped 3.8% to 6,699.30 after its central bank boosted its benchmark interest rate for a sixth consecutive month to a nine-year high of 2.6%. The Reserve Bank of Australia’s increase of a quarter percentage point to the cash rate was smaller than those at recent monthly meetings.

When the bank lifted the rate by a quarter percentage point at its board meeting in May, it was the first rate hike in more than 11 years. It’s now at its highest point since August 2013, when the bank cut the rate from 2.75% to 2.5%.

Markets in Hong Kong and Shanghai were closed for holidays.

“Asian equities were positive on Tuesday after a corrective session as traders eye potentially oversold market conditions,” Anderson Alves at ActivTrades said in a report.

On Monday, Wall Street soared to its best day in months in a widespread relief rally after some unexpectedly weak data on the economy raised the possibility that the Federal Reserve won’t have to be so aggressive about hiking interest rates.

The S&P 500’s leap of 2.6% to 3,678.43 was its biggest since July, the latest swing for a scattershot market that’s been mostly falling this year on worries about a possible global recession.

The Dow Jones Industrial Average jumped 2.7%, to 29,490.89, and the Nasdaq composite gained 2.3% to 10,815.43.

Stocks took their cue from the bond market, where yields fell to ease some of the pressure that’s been battering markets this year. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, fell to 3.62% from 3.83% late Friday. It got as high as 4% last week after starting the year at just 1.51%.

A report on U.S. manufacturing came in weaker than expected, along with data showing a drop off in construction spending from July to August. That may seem discouraging, but could mean the Federal Reserve can ease off on raising interest rates to beat down the high inflation damaging households’ finances.

By raising rates, the Fed is making it more expensive to buy a house, a car or most anything else purchased on credit. The hope is to slow the economy just enough to starve inflation of the purchases needed to keep prices rising so quickly.

The Fed has already pulled its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March. Most traders expect it to be more than a full percentage point higher by early next year.

But stresses are building in financial markets and corporate profits have weakened as central banks around the world hike rates in concert.

The yield on the two-year Treasury, which more closely tracks expectations for Fed action, fell to 4.11% from 4.27% following the weaker-than-expected reports on the economy.

Besides stocks, lower rates also boost prices for everything from cryptocurrencies to gold, which can suddenly look a bit more attractive when bonds are paying less in income.

Stocks of high-growth companies and particularly risky or expensive investments have been the most affected by changes in rates. Bitcoin rallied Monday with the reprieve in yields, while technology stocks did the heaviest lifting to carry the S&P 500. Apple and Microsoft both rose more than 3%.

Monday’s rally came despite an 8.6% drop for Tesla, one of the most influential stocks on Wall Street because of its massive market value. The maker of electric vehicles delivered fewer vehicles from July through September than investors expected.

The latest update on the U.S. jobs market comes on Friday. Along with reports on inflation, the jobs report is one of the most highly anticipated pieces of data on Wall Street each month.

It will be the last jobs report before the Fed makes its next decision on interest rates, scheduled for Nov. 2. Continued strength would give the central bank more leeway to keep hiking. Traders say the likeliest move is a fourth straight increase of a whopping three-quarters of a percentage point, triple the usual move.

In energy trading, benchmark U.S. crude added 23 cents to $83.86 a barrel. It jumped Monday amid speculation big oil-producing countries could soon announce cuts to production. Shares of energy-producing companies made big gains. Exxon Mobil leaped 5.3%, and Chevron climbed 5.6%. Brent crude, the international standard, added 42 cents to $89.28 a barrel.

In currency trading, the U.S. dollar inched up to 144.84 Japanese yen from 144.81 yen. The euro cost 98.28 cents, inching down from 98.40 cents.

———

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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October 3, 2022
World shares mostly lower as recession fears deepen

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BANGKOK — Shares dropped in Europe and Asia on Monday while oil prices surged more than $3 a barrel amid dire warnings over energy shortages in Europe if Russia cuts off gas supplies.

Germany’s DAX fell 1% to 11,998.26 while the CAC 40 in Paris shed 1.2% to 5,690.88. Britain’s FTSE 100 lost 0.8% to 3,305.79. On Wall Street, the future for the S&P 500 was up 0.2% while the contract for the Dow industrials gained 0.4%.

In its quarterly gas report, the Paris-based International Energy Agency said people will have to save at least 13% over the winter if Russia cuts off the last trickle of gas that’s flowing to Europe.

Europe faces “unprecedented risks” to its natural gas supplies this winter after Russia cut off most pipeline shipments and could wind up competing with Asia for already scarce and expensive liquid gas that comes by ship, the IEA said.

Reports that major oil producers plan further production cuts were also exerting upward pressure on energy prices.

U.S. benchmark crude oil gained $3.18 to $82.67 per barrel in electronic trading on the New York Mercantile Exchange. It lost $1.74 to $79.49 per barrel on Friday.

Brent crude oil, the standard for pricing international oil, rose $3.29 to $88.43 per barrel.

OPEC and allied oil-producing countries, including Russia, made a small trim in their supplies to the global economy a month ago, underlining their unhappiness as recession fears help drive down crude prices.

In Asian trading, Japan’s Nikkei 225 index gained 1.1% to 26,215.79 after a Bank of Japan quarterly survey showed sentiment among manufacturers has darkened, reflecting rising costs, the weakening yen and lingering pandemic-related restrictions.

The headline measure for the “tankan,” measuring sentiment among large manufacturers, was plus 8, down from plus 9 the previous quarter. The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

“Today’s Tankan survey suggests that while the services sector is benefitting from the subsiding virus wave, the outlook for the manufacturing sector continues to worsen,” said a report from Capital Economics. It noted it was the third consecutive decline in sentiment for the world’s third largest economy.

The BOJ has kept interest rates below zero in a longstanding effort to encourage inflation and keep deflation at bay as the country ages and its population shrinks. That has kept the value of the yen weak relative to the U.S. dollar, which has been strengthening as the Federal Reserve raises rates to combat decades-high inflation.

The dollar was trading at 145.15 yen early Monday, up from 144.68 yen late Friday. That raised speculation that the central bank might once again intervene to prevent the yen from weakening further. The euro was at 97.98 cents, up from 97.96 cents.

The stunning and swift rise of the U.S. dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somewhere in global markets.

Elsewhere in Asia, Hong Kong’s Hang Seng index fell 0.8% to 17,079.51. Australia’s S&P/ASX 200 slipped 0.3% to 6,456.90. Taiwan’s Taiex lost 0.9% and Bangkok’s SET declined 1.8%.

Wall Street closed out a miserable September on Friday with the S&P 500′s worst monthly skid since the coronavirus pandemic crashed global markets. It’s now at its lowest level since November 2020 and is down by more than a quarter since the start of the year.

The Fed has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. On Friday, the Fed’s preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep hiking rates and hold them at high levels a while, raising the risk of it going too far and causing a downturn.

The S&P 500 fell 1.5% on Friday while the Dow Jones Industrial Average dropped 1.7%. The Nasdaq composite slid 1.5% and the Russell 2000 lost 0.6%.

Other worries hang over global markets, including Russia’s invasion of Ukraine. A U.K. government plan to cut taxes sent bond markets spinning recently on fears it could make inflation even worse. Bond markets calmed a bit only after the Bank of England pledged last week to buy however many U.K. government bonds are needed to bring yields back down.

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October 3, 2022
Business sentiments cool as cheap yen, costs weigh on Japan

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TOKYO — Business sentiment among large manufacturers worsened for the third straight quarter, a Bank of Japan survey showed Monday, as the nation grappled with rising costs, the dropping value of the yen and restrictions on economic activity over the coronavirus pandemic.

The headline measure for the “tankan,” measuring sentiment among large manufacturers, was plus 8, down from plus 9 the previous quarter.

The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

Worries are growing about how the Bank of Japan hasn’t gone along with other central banks in tightening interest rates to curb growing inflation. Japan has been trying to fight deflation in recent years and has kept interest rates at near zero.

The nose-diving yen is also a concern, although a cheap yen has in the past been lauded as helping the nation’s big exporters like Toyota Motor Corp., by raising the value of overseas earnings.

The rising costs of imports, including energy as well as food, is hurting Japan, when the U.S. dollar is now trading at nearly 145 yen, when it used to be at 130-yen levels just a few months ago. A year ago, the dollar cost 111 yen.

Sentiment among large nonmanufacturers improved to 14 from 13, according to the latest tankan.

The world’s third-largest economy has struggled for decades to keep growth going. But the stagnation has worsened the last two years because of reduced travel and supply shortages caused by the pandemic.

The war in Ukraine has added to the problems for a resource-poor nation that imports almost all its oil.

The return of individual visa-free travel later this month is certain to work to boost incoming tourists.

The pandemic had squelched overseas tourism, which had sustained economic activity in recent years.

———

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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October 2, 2022
Wall Street drifts near 2022 low as dismal week, month close

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NEW YORK — Wall Street is drifting around its worst levels in almost two years Friday as the end nears for what’s been a miserable month for markets around the world.

The S&P 500 was virtually unchanged in midday trading after flipping between small losses and gains through the morning. It’s hovering around its lowest level since November 2020, and it’s on pace to close out its sixth weekly loss in the last seven, one of its worst months since the early 2020 coronavirus crash and its third straight losing quarter.

The Dow Jones Industrial Average was down 95 points, or 0.3%, at 29,130, as of noon Eastern time, and the Nasdaq composite was 0.4% higher.

The main reason for this year’s struggles for financial markets has been fear about a possible recession, as interest rates soar in hopes of beating down the high inflation that’s swept the world.

The Federal Reserve has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. More data arrived Friday to suggest the Fed will keep its foot firmly on the brakes on the economy, raising the risk of its going too far and causing a downturn.

The Fed’s preferred measure of inflation showed prices rising even faster than economists expected last month, while spending by consumers rebounded. That should keep the Fed on track to keep raising rates and hold them at high levels a while, as it’s loudly and repeatedly promised to do.

Vice Chair Lael Brainard was the latest Fed official on Friday to insist it won’t pull back on rates prematurely. That helped to keep snuffed out hopes on Wall Street for a “pivot” toward easier rates as the economy slows.

“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.

Higher interest rates knock down one of the main levers that set prices for stocks. The other also looks to be under threat as the slowing economy, high interest rates and other factors weigh on corporate profits.

Nike slumped 11.8% in what could be its worst day in two decades after it said its profitability weakened during the summer because of discounts needed to clear suddenly overstuffed warehouses. The amount of shoes and gear in Nike’s inventories swelled by 44% from a year earlier. This year’s powerful surge for the U.S. dollar against other currencies also hurt the company. Its worldwide revenue rose only 4%, instead of the 10% it would have if currency values had remained the same.

Nike isn’t the only company to see its inventories balloon. So have several big-name retailers, and such bad news for businesses could actually mean some relief for shoppers if it leads to more discounts. It echoed some glimmers of encouragement buried within Friday’s report on the Fed’s preferred gauge of inflation. That showed some slowing of inflation for goods, even as price gains kept accelerating for services.

Another report on Friday also offered a glimmer of hope. A measure of consumer sentiment showed U.S. expectations for future inflation came down in September. That’s key for the Fed because expectations for higher inflation among households can create a debilitiating, self-reinforcing cycle that worsens it.

Treasury yields eased a bit on Friday, letting off some of the pressure that’s built on markets.

The yield on the 10-year Treasury fell to 3.73% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, sank to 4.13% from 4.19%.

Still, a long list of other worries continues to hang over global markets, including increasing tensions between much of Europe and Russia following the invasion of Ukraine. A controversial plan to cut taxes by the U.K. government also sent bond markets spinning on fears it could make inflation even worse. Bond markets calmed a bit after the Bank of England pledged mid-week to buy however many U.K. government bonds are needed to bring yields back down.

The stunning and swift rise of the U.S. dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somwhere in global markets.

Stocks around the world were mixed after a report showed that inflation in the 19 countries that use Europe’s euro currency spiked to a record and data from China said that factory activity weakened there.

——

AP Business Writers Joe McDonald and Matt Ott contributed.

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September 30, 2022