Asian stock markets showed a mixed performance on Thursday, following a decline in U.S. shares, primarily driven by losses in the technology sector.
In Japan, the Nikkei 225 rose 0.7% to close at 38,400.00, while Australia’s S&P/ASX 200 gained 0.8%, reaching 8,473.30. South Korea’s Kospi, however, was flat at 2,503.01 after the Bank of Korea announced a quarter-point reduction in its benchmark interest rate to 3%. The rate cut was part of an effort to alleviate economic pressures, and the central bank also revised down its growth forecast for the nation, lowering projections for 2024 from 2.4% to 2.2%, and for 2025 from 2.1% to 1.9%.
Chinese markets saw declines as investors took profits from recent gains. The Hang Seng index in Hong Kong dropped 1.3% to 19,344.07, and the Shanghai Composite fell 0.3% to 3,299.87.
In the U.S., markets were closed on Thursday for the Thanksgiving holiday, but the previous day saw a modest pullback. The S&P 500 dropped 0.4% to 5,998.74, snapping a seven-day winning streak, while the Dow Jones Industrial Average slipped 0.3% to 44,722.06 after five consecutive gains. Both the Dow and S&P 500 remain close to record highs. The Nasdaq, which is heavily influenced by tech stocks, declined 0.6% to 19,060.48, with major technology companies contributing to the market’s losses.
Tech giants Nvidia, Microsoft, and Broadcom were among the biggest decliners. Nvidia fell 1.2%, while both Microsoft and Broadcom lost 1.2% and 3.1%, respectively. Several personal computer manufacturers also dragged the market lower. HP saw a sharp drop of 11.4% after it issued a weaker-than-expected earnings forecast for its current quarter, and Dell dropped 12.2% after reporting disappointing revenue for the latest quarter.
On the positive side, financial and healthcare stocks provided some relief. Berkshire Hathaway gained 0.9%, and Merck & Co. added 1.5%.
The U.S. Commerce Department reported that the economy grew at a solid pace of 2.8% in the third quarter, unchanged from the initial estimate. The growth was primarily driven by strong consumer spending and a surge in exports, although recent earnings reports from retailers painted a mixed picture. Nordstrom dropped 8.1% after warning of declining sales, while Urban Outfitters surged 18.3% after reporting stronger-than-expected third-quarter earnings.
Despite robust consumer spending, inflation remains a concern. The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose to 2.3% in October, up from 2.1% in September. Inflation, which had been steadily declining from its peak in mid-2022, now appears to be plateauing as it nears the Fed’s 2% target. The central bank had raised interest rates aggressively in 2022 and 2023 to combat inflation but has begun to lower rates since September.
Market expectations point to a quarter-point rate cut at the Fed’s December meeting. However, the potential for new tariffs under President-elect Donald Trump’s administration could complicate matters. Trump has indicated plans to impose tariffs on Mexico, Canada, and China when he takes office, which could push prices higher and add inflationary pressure, potentially influencing future Fed decisions on interest rates.
In commodity markets, U.S. benchmark crude oil slipped by 15 cents to $68.57 per barrel, while Brent crude, the international benchmark, also lost 15 cents, settling at $72.15. The U.S. dollar strengthened slightly against the Japanese yen, rising to 151.56 yen from 151.12 yen, while the euro weakened slightly against the dollar, falling to $1.0555 from $1.0567.
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