TOKYO, Japan (AP) - Asian stocks were mostly lower on Friday due to looming concerns over U.S. bankers and lagging Chinese demand. China is the major growth driver in Asia.
Stephen Innes said that Asian equities were struggling to find direction following weak inflation data from China, which pointed out a weakening of demand.
He said that recent data show very low inflation in China and a weakening of credit extension, all indicators of a slowing down as the initial growth spurt from China removing pandemic-related sanctions fades.
Nissan Motor Co., which reported relatively positive earnings, helped boost the Nikkei's performance. SoftBank Group Corp. fell after it reported its second consecutive year of losses.
The S&P/ASX200 index in Australia rose by 0.1%, to 7,256.70. South Korea's Kospi fell 0.7% to 2,473.48. Hong Kong's Hang Seng fell 0.5% to 19,641.04, and the Shanghai Composite dropped nearly 1.0% at 3,277.64.
Stocks on Wall Street were dragged down by a sudden and unexpected drop in The Walt Disney Co. shares after it reported that streaming subscribers had dropped last quarter.
Two out of three stocks in this index fell. The Dow Jones Industrial Average fell 221.82, or 0.7 percent, to 33 309.51, while Nasdaq Composite rose 22.07 points, or 0.2% to 12,328.51.
After three bank failures in the United States since March, investors are looking for the next victim.
A report that showed U.S. wholesale inflation was lower than expected last month helped limit losses on the market. This report followed one the day before that showed consumer inflation was also largely in line with forecasts.
Wall Street was reassured by the reports that the Federal Reserve would not raise interest rates at its next meeting, scheduled for June. This would be the very first time in over a year that this has happened.
Separately, a U.S. government report stated that more people than expected filed for unemployment last week. This adds to fears of a possible recession, as the job market is one of the main pillars supporting the economy.
A cooling labor market is also beneficial for the Fed. It fears that an overheated job market will increase inflation.
Treasury yields dropped following the reports on the expectation of a Fed that is less aggressive. The traders are betting that there is a high likelihood that the Fed has to lower interest rates this year. Rate cuts are like steroids for the financial markets, but they would only happen if an economic recession was imminent and needed such a boost.
The banks' main concern is the possibility that the problems in the banking industry could lead to a reduction in lending. This would be bad for the economy. The U.S. Government is getting closer to the June 1 deadline, when it may run out of money unless Congress permits it to borrow additional funds. Economists warn that a default by the U.S. Government on its debt could have catastrophic effects for the economy.
Late Wednesday, the yield on 10-year Treasury bonds fell from 3.44% to 3.39%. This helps to set mortgage rates and other important loan rates. The yield on the two-year Treasury, which is more sensitive to expectations of the Fed, dropped from 3.91% to 3.90%.
Energy trading saw benchmark U.S. Crude drop 27 cents, to $70.60 per barrel. Brent crude, which is the international standard for oil, fell 32 cents to $74.66 per barrel.
The U.S. Dollar rose from 134.52 Japanese yen to 13,479 yen in currency trading. The euro is now $1.0929 - a slight increase from $1.0921.
Stan Choe, AP Business Writer from New York, contributed to this article.
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