BANGKOK (AP) — Stocks in Asia were mixed Thursday after a lackluster finish on Wall Street following a report showing a rise in U.S. inflation last month
The dollar was trading at 156 Japanese yen, up from 155.49 yen, reflecting expectations that the dollar will rise against other currencies under expected policies with the incoming administration of President-elect Donald Trump.
Japan’s Nikkei 225 index edged less than 0.1% higher to 38,754.50 and South Korea’s Kospi rose 0.5% to 2,429.23. Australia’s S&P/ASX 200 gained 0.4% to 8,223.20.
Chinese markets fell, with Hong Kong’s Hang Seng down 0.9% to 19,649.91. The Shanghai Composite index lost 0.3% to 3,428.37.
Bangkok’s SET lost 0.2% and Taiwan’s Taiex fell 0.5%, while India’s Sensex was 0.1% higher.
A stronger dollar tends to put pressure on other economies, noted Stephen Innes of Capital Economics. The Thai baht has also weakened against the dollar since the US election, as has the Chinese yuan, or renminbi, which is now at 7.2245 per dollar and was trading at around 7 yuan per dollar in early October.
“For Asia, and especially for economies closely linked to China, the dominance of the dollar is about to become an economic wrecking ball,” he said in a commentary. “Countries with large USD debts are preparing for impact,” he added.
US stock markets fell to a mixed close on Wednesday after the latest inflation update raised hopes that a rate cut next month would provide more support for the economy.
The S&P 500 was virtually unchanged, rising 1.39 points to 5,985.38, an increase of less than 0.1%. It was the first defeat since a large demonstration broke out after election day on November 5. The Dow Jones Industrial Average rose 0.1% to 43,958.19, and the Nasdaq index fell 0.3% to 19,230.74.
U.S. consumer inflation accelerated from 2.4% to 2.6% in October, but an underlying measure called “core inflation” did not rise. Such core inflation can be a better predictor of future trends, economists say, so the numbers added to expectations for more help from the Federal Reserve.
The Fed began cutting interest rates from a two-decade high in September to keep the labor market afloat, after bringing inflation back almost all the way to its 2% target. Rates were cut again earlier this month and traders now see an improved probability of around 80% for a third cut at the meeting next month, according to data from CME Group.
These expectations caused the yield on the two-year government bond to fall from 4.34% at the end of Tuesday to 4.27%. The yield on ten-year government bonds, which also takes future economic growth more into account, rose to 4.45%, compared to 4.43% at the end of Tuesday.
But Trump’s victory in the presidential election has increased uncertainty about the Fed’s future course. Economists say his preference for lower taxes, higher tariffs and less regulation could ultimately lead to higher U.S. debt and inflation, as well as faster economic growth.
While lower interest rates can boost the economy and investment prices, they can also fuel inflation.
Rivian Automotive rose 13.7% after the electric vehicle company provided more details about a joint venture it is entering into with the Volkswagen Group that it previously announced. The total size of the deal could be worth up to $5.8 billion, higher than the $5 billion the companies had previously said.
Shares of Spirit Airlines lost 59.3% after it said in a regulatory filing that it is trying to work out a deal to renegotiate the repayment of its debt, which could wipe out the company’s shareholders, but could protect employees and customers.
In the crypto market, bitcoin was trading at $90,300 after crossing above $93,000, while cryptocurrencies in general soared. Trump has embraced cryptocurrencies and promised to make the US the crypto capital of the world.
Dogecoin, a cryptocurrency favored by Tesla’s Elon Musk, also gave up some of its gains from earlier in the day. Trump called Musk one of the heads of a ‘Department of Government Efficiency’, or DOGE for short.
In other trades early Thursday, U.S. benchmark crude lost 37 cents to $68.06 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 29 cents to $71.99 a barrel.
The euro fell from $1.0587 to $1.0548.
___
AP Business Writer Stan Choe contributed.
