Asian shares were mostly higher on Wednesday following the upward movement of stocks on Wall Street. Investors are eagerly anticipating an update on U.S. inflation, hoping for a smaller increase that will relieve some of the pain being experienced by everyone.
Market Highlights
Here are the highlights from major Asian markets:
- Hang Seng Index (HSI) in Hong Kong jumped 1.3%
- S&P/ASX 200 (XJO) in Australia added 0.4%
- Kospi in Seoul rose 0.3%
- Nikkei 225 (NIK) in Tokyo dropped 0.8% due to North Korea’s missile launch
- Shanghai Composite Index (SHCOMP) slipped 0.1%
North Korea Launches Missile
North Korea launched a long-range ballistic missile toward its eastern waters. This move came just two days after the country issued threats of “shocking” consequences in response to what it deemed provocative U.S. reconnaissance activity near its territory.
Wall Street’s Performance
On Tuesday, Wall Street saw positive performance:
- S&P 500 (SPX) rose 0.7% to 4,439.26
- Dow Jones Industrial Average (DJIA) gained 0.9% to 34,261.42
- Nasdaq Composite (COMP) added 0.5% to 13,760.70
A significant portion of the S&P 500’s gains occurred within the final 20 minutes of trading.
Waiting Game Ahead of U.S. Inflation Reports
Stephen Innes of SPI Asset Management commented that while there was some lively activity on a few stocks, most investors are playing the waiting game as they anticipate upcoming major U.S. inflation reports.
Inflation Rates Expected to Slow in the US
Introduction
The U.S. government is set to release the latest update on inflation at the consumer level later this week. Economists are predicting another slowdown, with prices estimated to be 3.1% higher in June compared to the previous year. This is a decline from May’s inflation rate of 4% and just above the 9% inflation rate recorded last summer. The hope is that this ongoing easing of inflation will prompt the Federal Reserve to halt its interest rate hikes.
Impact of High Interest Rates
While high interest rates have helped reduce inflation, they have also had negative consequences in various industries. The banking and manufacturing sectors, in particular, have experienced difficulties due to the impact of these rates. Furthermore, stock prices and other investments have also been affected.
Earnings Reports Forecast a Downturn
Later this week, companies will announce their profit figures for the spring season. Experts are predicting a significant decline in earnings per share for S&P 500 companies, marking the steepest drop since the COVID-19 pandemic devastated the global economy in 2020. However, given the low expectations set for spring earnings, companies may be able to meet these targets without needing any exceptional performance.
Market Updates
In other trading news on Wednesday, benchmark U.S. crude oil gained 17 cents, reaching $75.00 a barrel on the New York Mercantile Exchange. International trading reference point Brent crude oil also saw an increase, rising by 22 cents to $78.45 a barrel.
Exchange Rate
The value of the U.S. dollar against the Japanese yen decreased from 140.44 yen to 139.61 yen.