Asian stocks were mostly lower on Wednesday as investors expected the Federal Reserve to cut interest rates, while Australia’s benchmark hit a new record high.
US futures fell and oil prices rose.
In Tokyo, the Nikkei 225 index gave up earlier gains and fell 0.4 percent to 41,097.69. The Finance Ministry reportedly intervened in the currency market last week, buying nearly 6 trillion yen ($37 billion) to support the yen.
The U.S. dollar fell to 157.79 Japanese yen from 158.34 yen on Wednesday. The yen weakened to 161.85 per dollar last Wednesday and rose to 157.89 last Friday.
Australia’s S&P/ASX 200 rose 0.7% to 8,057.90 after hitting an all-time high of 8,083.70 in morning trading. South Korea’s Kospi lost 0.8% to 2,843.29.
Hong Kong’s Hang Seng index rose 0.2% to 17,761.66, while the Shanghai Composite index lost 0.3% to 2,967.32.
Elsewhere, Taiwan’s Taiex fell 1%, while shares of Taiwan Semiconductor Manufacturing Company fell 2.4%. Bangkok’s SET rose 0.2%.
On Tuesday, the S&P 500 rose 0.6% to 5,667.20, marking the 38th record high this year. Unlike previous record days, Tuesday came after a broad-based rally that saw nearly nine out of 10 stocks in the S&P 500 rise, rather than just the handful of powerful Big Tech stocks that have powered most of this year’s returns.
The Dow Jones Industrial Average rose 1.9% to 40,954.48, while the Nasdaq Composite trailed with a 0.2% gain to 18,509.34, as the stars dimmed for some of the year’s biggest winners.
Several big winners from the day before, who benefited from increased expectations that former President Donald Trump would retake the White House, gave back some of their immediate leads after Trump dodged an assassination attempt over the weekend.
Trump Media & Technology Group fell 9.1%, a day after jumping 31.4%. Shares of the company behind Trump’s Truth Social platform regularly swing by large percentage points each day, up or down.
In the bond market, some of the previous day’s moves reversed themselves as well. Long-term yields fell more than short-term yields after a report showed U.S. retail sales held up last month despite economists’ expectations for a decline.
The yield on the 10-year Treasury note fell to 4.16% from 4.23% late Monday. It is down from 4.70% in April, marking a significant move for the bond market and providing a major boost to stock prices.
Yields have fallen on rising expectations that inflation will ease enough to convince the Federal Reserve to start cutting rates soon. The Fed is keeping its key interest rate at the highest level in more than two decades in hopes of slowing the economy just enough to bring inflation fully under control.
Tuesday’s stronger-than-expected retail sales data may give Fed officials pause, as too much activity could weigh on inflation. But traders are still betting on a 100% probability that the Fed will cut its key interest rate in September, according to CME Group data. A month ago, they saw a 70% chance.
There are risks on both sides of the tightrope the Federal Reserve is currently walking. The central bank hopes to ease the brakes it has put on the economy with high interest rates at the right time. Easing too early could send inflation back up, but easing too late could trigger a recession. Tuesday’s retail sales data points to an economy that has remained resilient so far.
In other trading, U.S. benchmark crude rose 1 cent to $79.72 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, fell 8 cents to $83.65 a barrel.
The euro rose from $1.0898 to $1.0912.
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AP Business journalist Stan Choe contributed.
