Tue, Sep 19, 2023 11:04 PM
By YURI KAGEYAMA, AP Business Writer
TOKYO (AP) — Asian shares declined Wednesday as markets awaited a decision on interest rates by the Federal Reserve.
Japan's Nikkei 225 fell 0.1% in morning trading to 33,200.34. Australia's S&P/ASX 200 slipped 0.6% to 7,152.70. South Korea's Kospi edged down 0.1% to 2,556.20. Hong Kong's Hang Seng dipped 0.4% to 17,932.24, while the Shanghai Composite shed 0.3% to 3,115.10.
Trade data for Japan showed exports fell 0.8% last month from a year ago, marking the second straight month of declines, as exports to China lagged, dropping 11%. Japan's exports to the U.S. rose 5.1%, while exports to Europe surged 12.7%. By product category, auto exports zoomed 40.9%, while those of semiconductors rose 8.1%, according to Finance Ministry data.
“We think the weak recovery in China will continue to have a negative impact on exports for a while, but semiconductors seem like they are bottoming out from the down cycle," Robert Carnell, regional head of research Asia-Pacific at ING, said in a report.
He said the strong contribution to economic growth in the April-July quarter was expected to weaken in this quarter.
In an update on the Chinese economy, officials in Beijing acknowledged challenges in boosting growth in the worlds No. 2 economy, but told reporters they were confident that a recovery was underway and that they had the capacity to ensure stability of financial markets.
On Wall Street, the S&P 500 slipped 0.2% to 4,443.95. The Dow Jones Industrial Average dropped 0.3% to 34,517.73, and the Nasdaq composite lost 0.2% to 13,678.19.
Markets have see-sawed for weeks on uncertainty about whether the Fed is done with its market-shaking hikes to interest rates. By pulling its main interest rate to the highest level in more than two decades, the Fed has helped inflation to cool from its peak last year but at the cost of hurting prices for investments and damaging some corners of the economy.
The Fed began its latest meeting on interest rates Tuesday, with an announcement scheduled for Wednesday. The overwhelming expectation is for the Fed to announce no change to rates. More focus will be on updated projections Fed officials give for where they see rates heading in upcoming years.
Traders are split on whether the Fed may raise rates again this year, but they’re largely expecting the Fed to begin cutting rates next year. Such cuts can act like steroids for financial markets, giving a lift to all kinds of investments.
A soft landing, where inflation gets back to the Fed's 2% target without a painful recession, “is still possible, but not probable in our view,” according to Joe Davis, chief global economist and head of Vanguard's investment strategy group.
High rates have already hit the manufacturing and housing industries. A report Tuesday showed that homebuilders broke ground on fewer new homes in August than economists expected. The 11.3% drop from July’s level was much worse than the 0.8% forecasted. But activity for building permits, a possible indicator of future activity, rose more than expected.
On Wall Street, shares of Instacart climbed 12.3% in their first day of trading. The company raised $660 million in its initial public offering, which priced the stock at $30 per share.
It arrived on the heels of another highly anticipated IPO by chip designer Arm Holdings. The offerings could mark a warming environment for IPOs, which fell off sharply after stocks tumbled last year with worries about higher interest rates. Arm jumped in its first day of trading on Thursday but has since followed that with three days of losses.
The Walt Disney Co. fell 3.6% for one of the largest losses in the S&P 500 after it announced a big investment plan for its theme parks and cruise lines. It plans to double its investment in its parks, experiences and products business to $60 billion over the next 10 years versus the prior decade.
On the winning end of Wall Street was U.S. Steel, which rose 3.7% It said it expects to deliver strong results for the summer, above what analysts were expecting. That’s even with the impact on steel demand expected because of the limited strike by the United Autoworkers against Detroit’s Big 3 automakers.
Ford and General Motors held steadier after falling a day earlier, as the strike against them continues. The leader of the UAW said late Monday its limited strike could expand unless “serious progress” toward a new labor deal is made by Friday at noon. Ford rose 1.8%, and GM rose 1.9%.
In energy trading, benchmark U.S. crude lost 10 cents to $91.10 a barrel in electronic trading on the New York Mercantile Exchange. It fell 28 cents to $91.20 on Tuesday. It’s climbed roughly 13% this year as oil-producing countries curtail production. Brent crude, the international standard, fell 36 cents to $93.98 per barrel.
In currency trading, the U.S. dollar rose to 147.86 Japanese yen from 147.81 yen. The euro cost $1.0686, up from $1.0681.
AP Business Writer Stan Choe contributed.