TOKYO — Asian shares experienced a downward trend in cautious trading on Tuesday, as investors await crucial central bank meetings scheduled globally this week.
Key monetary policy discussions are set to occur at the Federal Reserve, the Bank of England, and the Bank of Japan.
In Japan, the benchmark Nikkei 225 index managed to recover from earlier losses, gaining 0.2% in afternoon trading, reaching 38,525.95. Conversely, Australia’s S&P/ASX 200 slipped 0.5% to 7,953.20, while South Korea’s Kospi fell 1% to 2,738.19. Hong Kong’s Hang Seng index dropped 1.3% to 17,014.17, with the Shanghai Composite index also declining by 0.4% to 2,879.30.
“Markets may struggle to position themselves ahead of the pivotal central bank meetings this week,” an analyst commented.
In positive news for Japan, the government reported a decrease in the unemployment rate for June to 2.5%, down from 2.6% the previous month, marking the first improvement in five months.
In the U.S., stock indexes closed with mixed results on Monday, kicking off a week filled with influential earnings reports from major corporations and a Federal Reserve meeting focused on interest rate decisions.
The S&P 500 saw a slight increase of 0.1% to 5,463.54, rebounding from its first consecutive weekly losses since April. The Dow Jones Industrial Average dipped 0.1% to 40,539.93, while the Nasdaq composite also climbed 0.1% to 17,370.20.
ON Semiconductor led market gains with an impressive leap of 11.5% after reporting stronger-than-expected profits, while McDonald’s stock grew by 3.7%, although its quarterly profit and revenue fell short of forecasts.
Oil and gas companies faced pressure as the price of oil retreated to levels seen two months prior. Stocks like ConocoPhillips and Exxon Mobil experienced losses amid concerns over China’s economic slowdown affecting crude oil consumption.
This week, several monumental tech companies are anticipated to release their earnings, including Microsoft, Meta Platforms, Apple, and Amazon. Their performance is particularly significant as they represent a substantial portion of market capitalization.
These large tech stocks, which have propelled the S&P 500 to numerous records this year—partly fueled by enthusiasm around artificial intelligence—have recently faced scrutiny regarding their valuations, raising worries about underwhelming results similar to those reported by Tesla and Alphabet.
While smaller stocks have thrived on expectations of easing inflation prompting the Fed to cut interest rates soon, the trend shifted slightly on Monday as Big Tech stocks rose while smaller firms in the Russell 2000 index fell by 1.1%. However, the Russell is still leading the market with a 9.2% gain for the month.
The Federal Reserve will announce its interest rate policy on Wednesday, with general consensus indicating no immediate changes but expectations for potential easing in the future.
In the bond market, Treasury yields remained steady, with the 10-year yield dipping to 4.17% from 4.19% at the end of the previous week, down from a peak of 4.70% in April.
In energy markets, benchmark U.S. crude prices decreased by 39 cents to $75.42 per barrel, while Brent crude fell 37 cents to $79.41.
In currency trading, the U.S. dollar increased to 155.02 Japanese yen from 154.00 yen, and the euro registered at $1.0824, slightly down from $1.0826.
