Asian stocks were mixed on Friday and the yen alternated between gains and losses as the latest inflation figures encouraged Wall Street to believe interest rate cuts could come as soon as September.
U.S. futures were mixed, while oil prices rose.
USD/JPY fell 2.1% overnight to 157.43 yen, spurring speculation that Japanese authorities may have intervened to amplify the impact of dovish US inflation data.
On Friday, the U.S. dollar rose to 159.26 yen from 158.80 yen.
Tokyo’s Nikkei stock average fell 2% to 41,388.92.
Hong Kong’s Hang Seng Index rose 1.9% to 18,165.33, while the Shanghai Composite Index fell 0.2% to 32,965.52 after data showed China’s exports rose 8.6% in June, beating market expectations.
Australia’s S&P/ASX 200 rose 0.8% to 7,952.20. South Korea’s KOSPI fell 1.2% to 2,857.11.
Meanwhile, Bangkok’s SET rose less than 0.1%. Taiwan’s Taiex fell 2% and Taiwan Semiconductor fell 3.7% in morning trading after the company said its June revenue rose about 33% from the same period last year.
The trend continued in overnight trading on Wall Street, where four of the five stocks in the S&P 500 index rose, but the resilience was masked by declines in shares of Nvidia, Microsoft and other influential companies. These giants have been the market’s biggest winners in the frenzy over artificial intelligence technology, and critics have said their shares are too expensive, helping to drag the S&P 500 index down 0.9% from its all-time high hit the previous day.
The Nasdaq Composite Index also fell 2% from its all-time high, driven by losses in big tech stocks. The drop snapped a seven-day winning streak for both the S&P 500 and the Nasdaq Composite Index. The Dow Jones Industrial Average, which has a low weighting in tech stocks, rose 32 points, or 0.1%.
The direction was clearly up for most Wall Street stocks, especially housing companies, property owners and others who stand to benefit from easing interest rates. SBA Communications, which owns towers and other facilities used in wireless communications infrastructure, rose 7.5%, the biggest gainer in the S&P 500 index.
The day was even stronger in the bond market, where yields fell sharply as traders grew more confident that the Federal Reserve will soon start cutting its key interest rate, after remaining stuck at the highest level in more than two decades for nearly a year.
Wall Street wants to cut interest rates to ease pressures that have built up in the economy as it has become too expensive to borrow on credit cards to buy homes, cars and other items. But Fed officials have said they want to see “better data” on inflation before taking any action.
Wall Street took that as precisely what a report on Thursday showed that prices for gasoline, cars and other goods bought by U.S. consumers rose more slowly than expected in June from a year earlier.
Treasury yields immediately fell sharply after the report was released. The yield on the 10-year Treasury note fell to 4.20% from 4.28% at Wednesday’s close, down from 4.70% in April. That’s a big move for the bond market, and it’s set to send stock prices soaring.
Falling yields have helped real estate owners and utility companies take the lead in the stock market, as lower bond yields make the relatively high dividends of these stocks more attractive to income-seeking investors.
S&P 500 real estate investment trusts, which include SBA Communications, rose 2.7%, the biggest gain among the index’s 11 sectors, followed by utilities, which rose 1.8%.
Homebuilders also fared well, buoyed by hopes that lower mortgage rates will spur the industry. D.R. Horton rose 7.3%, and Lennar rose 6.9%, the biggest gainers in the S&P 500. Mohawk Industries, which makes residential flooring products, rose 7.4%.
Overall, the S&P 500 fell 0.9% to 5,584.54, the Dow rose 0.1% to 39,753.75 and the Nasdaq Composite lost 2% to 18,283.41.
Meanwhile, benchmark U.S. crude rose 31 cents to $82.93 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, rose 21 cents to $85.61 a barrel.
The euro rose to $1.0869 from $1.0865.
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