TOKYO (AP) – Asian stocks were mostly lower on Tuesday as concerns over inflation dampened optimism over President Joe Biden’s comment that he was considering lowering US tariffs on Chinese imports.
Benchmarks fell in Tokyo, Seoul, Shanghai and Hong Kong but edged up in Sydney. Oil prices and US futures were lower.
Biden, who announced a new economic and trade initiative with the region during a visit to Japan, confirmed to reporters that he plans to discuss with Treasury Secretary Janet Yellen the issue of punitive tariffs imposed on China during the administration of former President Donald Trump to discuss when he returns to Washington.
“I’ll talk to the secretary when I get home. We’re considering it,” Biden said.
Comments raised optimism about the potential for easing tensions between the world’s two largest economies, but not everyone was convinced.
“Talks of cutting tariffs on China’s exports have surfaced before, and the lack of concrete action remains an element of disappointment for markets,” said Yeap Jun Rong, market strategist at IG Singapore.
Investors are keeping an eye on the impact of the war in Ukraine on commodity prices and the potential hit to global economic growth from the pandemic lockdowns in China.
Japan’s benchmark Nikkei 225 fell 0.5% to 26,863.33. Australia’s S&P/ASX 200 rose 0.1% to 7,155.90. South Korea’s Kospi was down 0.9% at 2,625.78. Hong Kong’s Hang Seng slipped 1.4% to 20,180.92, while the Shanghai Composite was down 0.4% to 3,133.72.
“Russia’s invasion of Ukraine, a wave of COVID-19 infections and lockdowns in mainland China, relentless inflation and tightening financial conditions have disrupted production and dampened demand, causing the global economy to falter advised,” said Sara Johnson, executive director at S&P Global Market Intelligence.
Wall Street started the week on an upbeat note after seven weeks of declines that almost ended the bull market that began in March 2020. The S&P 500 rose 1.9% to 3,973.75, with stocks in the technology and financial sectors providing much of the heavyweight for the benchmark index. The Dow Industrial Average was up 2% to 31,880.24 and the Nasdaq was up 1.6% to 11,535.27.
Smaller company stocks staged a rally. The Russell 2000 was up 1.1% to 1,792.76.
The recent sharp selling has prompted traders to buy big tech stocks and stakes in other companies that had been high-flyers before the market’s punishing slide, said Quincy Krosby, chief equity strategist at LPL Financial.
“What we’re seeing today are traders and investors coming in and taking advantage of the lower (price) levels,” she said. “This is the market tug-of-war between those who say the market is attractively valued and those who say ‘not really’ because it doesn’t account for much slower growth.”
Persistent concerns about inflation have weighed on the market, keeping major indices in a slump. The benchmark S&P 500 index is coming off its longest weekly losing streak since the dot-com bubble deflated in 2001. It was down almost 20% from its peak earlier this year, which would put the index at the center of most worker 401(k) accounts in a bear market.
A string of disappointing earnings reports from key retailers last week also raised concerns that consumers are reining in spending on a wide range of goods as rising inflation weighs on them.
Investors worry that the central bank may go too far in raising rates or act too quickly. That could slow business activity and possibly trigger a recession. On Wednesday, investors will get a more detailed look at the Fed’s decision-making process with the release of minutes from the latest policy-setting meeting.
Wall Street will also get some economic updates from the Department of Commerce this week. On Thursday they will release a report on first quarter gross domestic product and on Friday they will release data on personal income and spending for April.
In energy trading, the US benchmark crude fell 73 cents to $109.56 a barrel in electronic trading on the New York Mercantile Exchange. On Monday it was up 1 cent to $110.29 a barrel. Brent crude, the international price standard, fell 87 cents to $112.55 a barrel.
In forex trading, the US dollar rose from 127.78 yen to 127.98 Japanese yen. The euro cost $1.0673 compared to $1.0688.
___
AP Business Writers Damian J. Troise and Alex Veiga contributed.