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TOKYO (AP) — Asian stocks mostly rose Friday despite worries about the economic outlook and inflation in the U.S. and the rest of the world.
The Bank of Japan ended a monetary policy meeting without any significant changes, keeping its key interest rate in a range of 0% to 0.1%. In March, it raised the key interest rate from minus 0.1%, citing signs that inflation had reached the central bank’s target of around 2%.
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Japan’s benchmark Nikkei 225 index rose 0.8% to 37,934.76, while the U.S. dollar rose to 156.22 Japanese yen from 155.58 yen.
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Although a weak yen is a boon for giant Japanese exporters like Toyota Motor Corp. whose foreign profits are boosted by conversion into yen, some Japanese officials, including Finance Minister Shunichi Suzuki, have expressed concerns that a weak currency is not good for the Japanese economy in the long run.
In trading against other currencies, the euro cost $1.0740, up from $1.0733.
Australia’s S&P/ASX 200 fell 1.4% to 7,575.90. South Korea’s Kospi rose 1.1% to 2,656.33. Hong Kong’s Hang Seng gained 2.3% to 17,680.43, while the Shanghai Composite rose 1.1% to 3,087.60.
Wall Street was lower on Thursday amid worries about a potentially toxic cocktail combining stubbornly high inflation with a faltering economy. A sharp decline in Facebook parent company, one of Wall Street’s most influential stocks, also weighed on the market.
The S&P 500 fell 0.5% to 5,048.42. The Dow Jones Industrial Average fell 1% to 38,085.80 and the Nasdaq Composite fell 0.6% to 15,611.76.
Meta Platforms, the company behind Facebook and Instagram, fell 10.6% despite reporting better profit than analysts expected for its latest quarter. Instead, investors focused on the large investments in artificial intelligence that Meta had promised. AI has caused excitement on Wall Street, but Meta is increasing its spending as it also announced a forecast range for upcoming revenue, the median of which was below analysts’ expectations.
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Expectations were high for Meta, along with the other “Magnificent Seven” stocks that accounted for the bulk of stock market returns last year. They have to meet a high bar to justify their high stock prices.
The overall US stock market felt the pressure of a further rise in Treasury yields after a disappointing report that growth in the US economy in the first three months of this year slowed to an annual rate of 3.4% at the end of 2023 from 3.4% at the end of 2023 1.6% slowed.
That undermines a hope that has catapulted the S&P 500 to record highs this year: that the economy can avoid a deep recession and deliver strong gains for companies, even if it takes a while for high inflation to be fully controlled.
This is what Wall Street calls a “soft landing” scenario, and recently expectations have been rising for a “no landing” in which the economy would avoid a recession entirely.
Thursday’s economic data is likely to be revised a few times as the U.S. government refines the numbers. But the lower-than-expected growth and higher-than-expected inflation are “a bit of a slap in the face for those hoping for a no-landing scenario,” said Brian Jacobsen, chief economist at Annex Wealth Management.
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Treasury yields still rose as traders trimmed their bets on Federal Reserve interest rate cuts this year.
The yield on the 10-year Treasury note rose to 4.70% from 4.66% shortly before the report and from 4.65% late Wednesday.
Traders are largely betting on the possibility that the Fed will make only one or perhaps two rate cuts this year, if any, according to data from CME Group. At the start of the year they predicted six or more. A series of reports this year showing inflation remaining higher than forecast have dashed those expectations.
In energy trading, benchmark U.S. crude oil rose 37 cents to $83.94 a barrel on Friday. Brent crude, the international standard, rose 40 cents to $89.41 a barrel.
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AP business reporter Stan Choe contributed.
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