Tuesday, Asian markets were uncertain because of worries about a possible government shutdown in the U.S. and problems in the Chinese economy that were still going on. In Japan, the Nikkei 225 index fell 0.6% in morning trading and ended the day at 32,469.85. In Australia, the S&P/ASX 200 index fell 0.5% to 7,042.50. The Kospi in South Korea also went down, dropping by almost 1% to 2,471.30. The Shanghai Composite fell 0.2% and ended the day at 3,110.86, and Hong Kong’s Hang Seng fell 0.9% to 17,578.90.
China’s Economic Indicators in Focus
A lot of investors’ attention was on Chinese economic indicators that were going to be released later in the week. A big issue was the ongoing problems in the Chinese real estate market. For example, well-known developer Evergrande missed its 4 billion yuan onshore bond payment and pushed back important restructuring meetings, as Tina Teng, a market analyst at CMC Markets APAC & Canada, pointed out.
While these worries affected Asian markets, Wall Street showed signs of getting better after losing a lot of money last week. After having its worst week in six months, the S&P 500 was able to rise by 0.4% to reach 4,337.44. The Dow Jones Industrial Average also went up by 0.1% to 34,006.88 and the Nasdaq composite went up by 0.5% to 13,271.32.
Investors are now dealing with the fact that the Federal Reserve is likely to keep interest rates high for a long time, probably until next year. This is to fight inflation that stays high. The Federal Reserve said last week that it planned to lower interest rates in 2024, though not as quickly as had been thought before. Because of this decision, bond yields have reached their highest levels in more than ten years. This makes investors less likely to buy expensive assets, especially ones with long growth prospects.
The 10-year Treasury yield has gone up from 4.44% at the end of Friday to 4.53% now, getting close to levels not seen since 2007. After being around 3.50% in May and just 0.50% about three years ago, this is a big jump. David Kostin and other strategists at Goldman Sachs said that stocks tend to respond better to gradual interest rate hikes caused by economic growth than to sudden increases caused by things like inflation or Federal Reserve policy.
Wall Street has a lot of worries besides interest rates going up. Since June, the price of a barrel of oil has gone up by $20, which makes the world economy even less stable. Also, starting to pay back student loans in the U.S. may hurt consumer spending, which has been a big part of what keeps the economy going.
Possible U.S. Government Shutdown
The U.S. government may have to shut down again soon because of political unrest on Capitol Hill. Investors are paying close attention to what’s going on because previous shutdowns didn’t have much of an effect on the market.
In better news, Amazon’s stock price went up 1.7%, which made a big difference in the S&P 500’s good performance. The company said it would invest up to $4 billion in Anthropic, giving them a small stake in the artificial intelligence startup. This move shows that big tech companies are still putting money into the exciting field of AI.
In the entertainment industry, media stocks had a range of outcomes. For example, unionized screenwriters reached a tentative agreement to end their historic strike, but actors on strike have not yet reached a deal. Netflix went up 1.3%, but The Walt Disney Co. went down 0.3%. However, Warner Brothers Discovery fell by 4%, which was the most in the S&P 500.
Energy and Currency Markets
Companies that deal with travel were under pressure to go down because of worries about rising fuel costs. Southwest Airlines’ sales went down by 2%, and Norwegian Cruise Line’s sales went down by 3.1%.
Benchmark U.S. crude oil prices went down by 7 cents and settled at $89.61 per barrel in the energy markets. The world standard, Brent crude, dropped 14 cents to $93.15 a barrel. Exxon Mobil saw its stock rise 1.1%, and ConocoPhillips saw its stock rise 1.6%. Since the beginning of summer, oil prices have gone up sharply.
Lastly, the U.S. dollar got stronger in currency trading, going from 148.84 Japanese yen to 148.93 yen. The euro, on the other hand, went down a little from $1.0594 to $1.0586. These changes show how many complicated factors affect the world’s financial markets. Investors have to deal with a lot of economic problems and unknowns.