Stock market today: Asia dives ahead of US inflation report

Evolving… The story will be updated as new information can be verified. Updated 4 times

TOKYO (AP) — Asian stocks fell during moderate trading Wednesday as investors awaited an upcoming report on inflation in the United States, a key indicator of where interest rates and global growth could head in the coming months.

The Japanese benchmark Nikkei 225 lost 0.5% in morning trading to 29,105.27. The Australian S&P/ASX 200 fell nearly 0.1% to 7,257.60. The South Korean Kospi fell almost 0.1% to 2,508.04. The Hong Kong Hang Seng fell 0.6% to 19,746.67, while the Shanghai Composite lost 0.9% to 3,326.31.

Market watchers are also concerned about any signs of economic woes in China after recent data showed imports lagged while exports continued to grow, albeit at a slower pace than before.

The focus remains on what the US Federal Reserve could do on interest rates. While the general consensus is that the walks are over for now, that opinion could soon change.

“The market is expected to react skewed in the event of a data miss as the Fed has signaled its willingness to raise interest rates again if necessary,” said ActivTrades’ Anderson Alves.

On Wall Street, the S&P 500 fell 18.95 points, or 0.5%, to 4,119.17. The Dow Jones Industrial Average lost 56.88, or 0.2%, to 33,561.81, while the Nasdaq index fell 77.37, or 0.6%, to 12,179.55.

So far, most companies have beaten first-quarter earnings forecasts in this earnings reporting season, which is approaching its final phase. That’s largely because expectations were quite low due to a slowing economy and high interest rates. Companies in the S&P 500 are still on track to report a second straight quarter of weaker earnings than a year earlier.

“Companies have done pretty well,” said Margie Patel, senior portfolio manager at Allspring Global Investments.

The better-than-feared results have given Wall Street some support, while weighing in on many other concerns.

Chief among these is what will happen to the US banking system, which has been strained after three high-profile bank failures since March. Hurt by much higher interest rates, smaller and medium-sized banks try to reassure everyone that their deposits are stable and that they are not at risk of a sudden customer exodus.

The next big milestone for the market is Wednesday’s consumer-level inflation report. Inflation has fallen since last summer’s peak, but remains stubbornly high. That has led to uncertainty about what the Federal Reserve’s next move will be.

The central bank has already raised its benchmark interest rates to a range of 5%-5.25%, compared to virtually zero in early 2022. High rates can suppress inflation, but only by stifling the economy and flatly hurting investment prices.

Many investors are preparing for a recession that will hit later this year because of much higher interest rates and the potential for banks to pull out of lending because of the industry’s problems. While the labor market has remained resilient and the unemployment rate is remarkably low, other sectors of the economy, such as manufacturing, showed more weakness.

Concerns about a recession and expectations of possible rate cuts by the Fed have led to interest rates falling since early March.

In the bond market, the yield on 10-year Treasury bills increased from 3.51% to 3.52%. The two-year Treasury yield, which moves more than expected for the Fed, rose from 4.00% to 4.02%.

In energy trading, benchmark US crude lost 44 cents to $73.27 a barrel. Brent oil, the international standard, fell 45 cents to $76.99 a barrel.

In currency trading, the US dollar was unchanged at 135.18 Japanese yen. The euro was priced at $1.0975, a step up from $1.0967.

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AP Business Writer Stan Choe contributed from New York.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama