Asian stock markets had a mixed performance on Friday, with the Japanese yen losing some of its recent gains against the US dollar. This came after the latest US inflation data raised hopes on Wall Street that interest rate relief may be on the horizon in September. US futures and oil prices also saw an increase. The US dollar lost 2.1% against the yen overnight, prompting speculation that Japanese authorities may have intervened to amplify the impact of the milder inflation data. However, the dollar recovered some of its losses on Friday. Tokyo’s Nikkei 225 index experienced a 2.5% decline, while Hong Kong’s Hang Seng index climbed 2.4% and China’s Shanghai Composite index rose slightly. In Australia, the S&P/ASX 200 was up 0.9%, while South Korea’s Kospi slipped 1.4%.
In other markets, Bangkok’s SET index rose by 0.2%, while Taiwan’s Taiex declined by 2%, mainly due to a 1.9% drop in Taiwan Semiconductor’s stock. Although the company’s revenue increased by almost 33% in June compared to the same period last year, it was overshadowed by the decline in tech giants on Wall Street.
On Wall Street, the majority of stocks in the S&P 500 index experienced gains, with only a few influential companies like Nvidia and Microsoft experiencing pullbacks. These pullbacks masked the overall strength of the market. These tech giants, which have been leading the market due to the artificial intelligence frenzy, have faced criticism for their high valuation. As a result, the S&P 500 dropped 0.9% from its previous all-time high.
The decline in Big Tech stocks caused the Nasdaq composite to drop 2% from its previous record. This decrease marked the end of a seven-day winning streak for both the S&P 500 and Nasdaq composite. However, the Dow Jones Industrial Average, which is less reliant on tech stocks, managed to rise by 32 points or 0.1%.
On the other hand, many stocks on Wall Street experienced an upward trend, particularly housing-related companies, real-estate owners, and other businesses that benefit from lower interest rates. SBA Communications, a company that owns wireless communication infrastructure, had the largest gain in the S&P 500 with a 7.5% jump.
The bond market also saw significant activity, with yields dropping as traders speculated that the Federal Reserve would soon lower its main interest rate. This rate has remained at its highest level in over two decades for nearly a year.
The financial industry is advocating for lower interest rates in order to alleviate the economic burden caused by the high cost of borrowing for housing, cars, and credit card purchases. However, Federal Reserve officials have expressed the need for “more good data” on inflation before taking any action.
On Thursday, Wall Street reacted positively to a report that showed lower-than-expected price increases for gasoline, cars, and other consumer goods purchased in June compared to the previous year. This report led to an immediate drop in Treasury yields, with the 10-year Treasury yield falling from 4.28% to 4.20% and significantly lower than the 4.70% recorded in April. This shift in the bond market had a positive impact on stock prices.
As a result, the S&P 500 experienced a 0.9% decline, closing at 5,584.54. The Dow, on the other hand, rose 0.1% to 39,753.75, while the Nasdaq composite saw a 2% drop, ending at 18,283.41.
In other transactions, the price of U.S. benchmark crude oil increased by 57 cents to reach $83.19 per barrel in electronic trading on the New York Mercantile Exchange. The international standard, Brent crude, also saw a rise of 43 cents, reaching $85.83 per barrel. Additionally, the euro strengthened slightly against the dollar, rising to $1.0866 compared to $1.0865.