Shares across Asia saw mixed results on Friday, with major markets, excluding Shanghai and Taiwan, posting modest gains. U.S. futures and oil prices also experienced an uptick.
On Thursday, Wall Street saw a divided performance. General stocks and previously struggling sectors gained ground, while major Big Tech stocks retreated further from their impressive highs.
Early Friday, Tokyo’s Nikkei 225 index reversed its initial gains, dropping 0.5% to 37,667.41. This followed a 3.3% plunge the previous day amid widespread sell-offs in global markets. Tokyo’s core consumer price index rose 2.2% in July, marking its third consecutive month of increases and reaching a four-month high. This data has heightened expectations that the Bank of Japan might raise its near-zero benchmark interest rate in its policy meeting next week.
In Hong Kong, the Hang Seng index edged up 0.2% to 17,040.02, while the Shanghai Composite index dipped 0.1% to 2,882.03. Australia’s S&P/ASX 200 climbed 0.9% to 7,935.15, and South Korea’s Kospi added 0.9% to 2,735.63.
Taiwan’s Taiex dropped 3.3% upon reopening after a typhoon-induced market closure on Thursday. It reflected the retreat on Wednesday, which marked the S&P 500’s steepest loss since 2022. Taiwan Semiconductor Manufacturing Corp. fell 5.6%, mirroring declines in Big Tech stocks.
Elsewhere, Bangkok’s SET index rose 0.6%, and India’s Sensex gained 0.8%.
On Wall Street Thursday, the S&P 500 fell 0.5%, closing at 5,399.22. The Dow Jones Industrial Average rose 0.2% to 39,935.07, while the Nasdaq composite dropped 0.9% to 17,181.72. The Russell 2000 index of smaller companies surged 1.3%, boasting an 8.6% rise this month compared to the S&P 500’s 1.1% decline for larger stocks.
Persistent losses for Nvidia and other major Big Tech stocks, which have significantly driven the S&P 500’s record highs this year, continued to impact the market. These stocks had previously tumbled following underwhelming profit reports from Tesla and Alphabet, sparking concerns about an overvaluation fueled by artificial intelligence hype.
The influence of the “Magnificent Seven” stocks on Wall Street is profound due to their immense market value, which gives their stock movements considerable weight in the S&P 500 and other indexes.
Despite the tech sector’s struggles, most U.S. stocks rallied Thursday after a robust U.S. economic report raised optimism for the profitability of smaller companies and other previously neglected market sectors. The economy’s growth accelerated to an estimated 2.8% annual rate from April through June, double the rate of the prior quarter but not high enough to stoke inflation fears.
A crucial update on the Federal Reserve’s preferred inflation measure is expected later on Friday. With inflation largely under control, it is widely anticipated that the Federal Reserve will begin reducing its main interest rate, currently at its highest level in over two decades. Following Thursday’s economic report, traders saw a 100% probability of a rate cut in September, according to CME Group data.
Lower rates would alleviate economic and financial market pressures, potentially boosting stocks more closely tied to economic strength compared to Big Tech.
Airline stocks surged Thursday after American Airlines and Southwest Airlines reported better-than-expected spring profits. Southwest also announced it would start assigning seats and offering premium seating with extra legroom, breaking a 50-year tradition. American Airlines shares climbed 4.2%, while Southwest Airlines jumped 5.5%.
Conversely, Ford Motor Co. plummeted 18.4% after reporting lower-than-expected profits, with rising warranty and recall costs contributing to its net income decline.
Early Friday trading saw U.S. benchmark crude oil prices rise 11 cents to $78.39 per barrel on the New York Mercantile Exchange. Brent crude, the international standard, increased by 13 cents to $81.52 per barrel.
In currency trading, the U.S. dollar fell to 153.69 Japanese yen from 153.93 yen, and the euro rose to $1.0860 from $1.0847.
