WORLD

Stock market today: Asia markets weaker ahead of Fed decision; China economic data disappoint

Jan 29, 2024, 11:53 PM | Updated: Jan 30, 2024, 8:54 pm

HONG KONG (AP) — Asian stocks mostly declined Wednesday as markets awaited a decision on interest rates by the Federal Reserve, while China reported manufacturing contracted in January for a fourth straight month.

U.S. futures were mixed while oil prices fell back.

Japan’s Nikkei 225 fell 0.3% to 35,975.50.

South Korea’s Kospi shed 0.2% to 2,494.30 after Samsung Electronics reported reported an annual 34% decline in operating profit for the last quarter.

Hong Kong’s Hang Seng dipped 1.1% to 15,536.00, while the Shanghai Composite shed 0.4% to 2,819.91.

Official data showed China’s manufacturing purchasing managers index, or PMI, rose to 49.2 in January, up from 49.0 in December, but still below the critical 50 mark that indicates expansion rather than contraction. Weak demand in the world’s second largest economy is dragging on growth.

Australia’s S&P/ASX 200 added 0.8% to 7,657.20 after a survey showed Australia’s inflation rate fell to a two-year low in the December quarter, with the consumer price index at 4.1%, leading to bets that the Reserve Bank may consider an interest rate cut in the next move.

In Wall Street, U.S. stocks drifted through a quiet Tuesday and held near their record heights following a mixed set of profit reports.

The S&P 500 slipped 0.1% from its record to 4,924.97. The Dow Jones Industrial Average gained 0.3% to 38,467.31, and the Nasdaq composite fell 0.8% to 15,509.90.

UPS slumped 8.2% even though it reported stronger profit for the latest quarter than analysts expected. Its revenue fell short of Wall Street’s estimates, and it also gave a forecast for full-year revenue in 2024 that was weaker than expected.

Whirlpool sank 6.6% despite likewise reporting a better profit than expected. Its forecast for 2024 revenue of $16.9 billion was roughly $1 billion below analysts’ estimates.

Helping to offset those losses was General Motors. The automaker jumped 7.8% after reporting stronger profit and revenue than expected.

Treasury yields were also mixed in the bond market following reports that showed the economy remains stronger than expected. One said confidence among consumers is climbing, while another suggested the job market may be warmer than forecast.

U.S. employers advertised 9 million job openings at the end of December, which was a touch more than economists expected and slightly above November’s level. Traders were expecting the data to show a cooldown in the number of openings.

A drawdown would have fit more neatly into the trend that’s carried Wall Street to a record: a slowdown in the economy’s growth strong enough to keep a lid on inflation but not so much that it will create a recession.

Hopes for a continued such trend are what have Wall Street foaming about the possibility of several cuts to interest rates by the Federal Reserve this year. Cuts would mark a sharp turnaround from the Fed’s dramatic hikes to rates over the last two years, and the reductions would give a boost to the economy and investment prices.

The Federal Reserve began its latest policy meeting on interest rates Tuesday, but virtually no one expects it to cut rates this time. That won’t stop economists and traders from parsing every word coming out of the Fed Wednesday after its meeting finishes. They’ll be searching for clues that a rate cut may arrive at its next meeting in March.

“We think markets are overly optimistic that we’ll see a Fed interest rate cut in March,” said Joe Davis, chief economist at Vanguard. “It likely will be midyear before policymakers are confident that they have reined in inflation sufficiently to start cutting their target for short-term interest rates.”

The two-year Treasury yield, which moves closely with expectations for the Fed’s action, fell to 4.32% from 4.36% late Tuesday. It moved decisively higher following the release of the economic reports.

The yield on the 10-year Treasury, which is the centerpiece of the bond market, fell to 4.03% from 4.06% late Tuesday.

In energy trading, benchmark U.S. crude lost 32 cents to $77.50 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 40 cents to $82.10 per barrel.

In currency trading, the U.S. dollar rose to 147.73 Japanese yen from 147.59 yen. The euro cost $1.0821, down from $1.0845.

___

AP Business Writer Stan Choe contributed.

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