Business
Wall Street hangs near its records after wild swings in Asian markets
U.S. stocks are hanging near their records Monday following a wild start to the week for financial markets in Asia, where Japanese stocks tumbled and Chinese indexes soared.
The S&P 500 was virtually flat in early trading, coming off its sixth winning week in the last seven. The Dow Jones Industrial Average pulled back 155 points, or 0.4%, from its all-time high set on Friday. The Nasdaq composite was 0.2% higher, as of 9:37 a.m. Eastern time.
It’s a pause for Wall Street following its rally to records, catapulted by hopes the slowing U.S. economy can keep growing while the Federal Reserve cuts interest rates to offer it more juice. A big test will arrive Friday, when the U.S. government offers its latest monthly update on the job market.
An overriding worry on Wall Street is whether the economy is already heading for a recession. Even though the Fed cut rates earlier this month and has indicated more are to come, U.S. employers have already begun slowing their hiring. Before this month, the Fed had kept interest rates at a two-decade high in hopes of slowing the economy enough to stamp out high inflation.
“Payrolls remain the biggest catalyst” for the U.S. stock market until the election, strategists and economists at Bank of America wrote in a BofA Global Research report.
At Goldman Sachs, economist David Mericle says he’s expecting Friday’s report to show hiring in September was stronger than the 146,000 growth in payrolls that economists across Wall Street are broadly forecasting.
In the past, a stronger-than-expected number could have hurt the stock market by fanning worries about upward pressure on inflation. Now, though, it would likely be welcomed as a signal that a recession shouldn’t be as big a worry.
Interest rates and the strength of the economy are usually the two main levers that set prices for stocks. In Asia, the levers were pulling in opposite directions.
Japan’s Nikkei 225 slumped 4.8% on that the country’s incoming prime minister will support higher interest rates and other policies that investors see as less market-friendly. Shigeru Ishiba is set to take over on Tuesday.
Ishiba has expressed support for the Bank of Japan’s moves to pull interest rates away from their near-zero level, which would put upward pressure on the value of the Japanese yen. A stronger yen can hurt profits for Japanese exporters, who make sales in other currencies and then convert them back into yen.
Toyota Motor’s stock fell 7.6% in Tokyo, while Honda Motor’s dropped 7% Monday.
Stellantis, the company that owns the Jeep brand and others, tumbled 13.7% in Milan after cutting its forecast for upcoming profit. It cited investments to turn around its U.S. operations and increased Chinese competition.
Stock indexes broadly sank across much of Europe.
In China, meanwhile, indexes soared 8.1% in Shanghai and 2.4% in Hong Kong following the latest announcements of stimulus for the world’s second-largest economy. It was the best day for Shanghai stocks in nearly 16 years.
China’s central bank announced moves on Sunday to ease mortgage rates for existing home loans by Oct. 31. The major southern city of Guangzhou meanwhile lifted all home purchase restrictions over the weekend, while both Shanghai and Shenzhen revealed plans to ease key buying curbs.
The moves followed a flurry of announcements last week from China’s central bank and government intended to prop up the world’s second-largest economy, whose growth has been flagging under the weight of a struggling real-estate sector.
Markets in mainland China will be closed Tuesday through Oct. 7 for a holiday marking 75 years of communist rule in China.
In the bond market, the yield on the U.S. 10-year Treasury ticked up to 3.76% from 3.75% late Friday. The two-year yield, which more closely tracks expectations for what the Fed will do with short-term rates, rose more. It climbed to 3.60% from 3.56%.
The dollar steadied against major peers on Thursday, continuing its near paralysis of the past two days before more concrete announcements on tariffs from U.S. President Donald Trump.
A spate of central bank policy decisions are also due over the next week, with the Bank of Japan widely expected to raise interest rates at the end of a two-day meeting on Friday.
Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for Wednesday and Thursday of next week, respectively.
The dollar index – which measures the currency versus six top rivals, including the euro and yen – was flat at 108.25, following two days of gains of around 0.1%.
On Monday, it tumbled 1.2%, its steepest one-day slide since November 2023, as Trump’s first day in office brought a barrage of executive orders, but none on tariffs.
So far this week, Trump has mooted levies of around 25% on Canada and Mexico and 10% on China from Feb. 1. He also promised duties on European imports, without giving details.
“President Trump has so far taken a less hostile-than-expected approach to China,” amid overall “softer-than-expected policies and tone on tariffs”, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
At the same time, “we are cautious (that) risk sentiment remains fragile and can quickly turn sour if President Trump strikes a more aggressive tone.”
The Chinese yuan was little changed at 7.2812 per dollar in offshore trading .
Wall Street’s main indexes rose Wednesday, with the S&P 500 hitting an intraday record high thanks to strong Netflix earnings and a rally in tech shares.
Japan’s yen edged up about 0.1% to 156.40 with markets pricing 95% odds of a quarter-point hike on Friday.
The euro was flat at $1.0411. The ECB is widely expected to cut rates by a quarter point next week.
The Canadian dollar held steady at C$1.4386 against the greenback. The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.
The Mexican peso was little changed at 20.47 versus the U.S. currency.
Oil prices dipped in early trade on Thursday, extending losses amid uncertainty over how proposed tariffs by U.S. President Donald Trump on several countries would impact global economic growth and energy demand.
Brent crude futures fell 23 cents, or 0.3%, to $78.79 a barrel at 0135 GMT, while U.S. West Texas Intermediate crude (WTI) eased 18 cents, or 0.2%, to $75.26.
In its previous session, Brent futures settled at $79.00 in a fifth straight day of losses. WTI futures settled at $75.44 in a fourth consecutive day of declines.
Trump has said he would add new tariffs to his sanctions threat against Russia if the country does not make a deal to end its war in Ukraine. He added these could be applied to “other participating countries” as well.
He also vowed to hit the European Union with tariffs, impose 25% tariffs against Canada and Mexico, and said his administration was discussing a 10% punitive duty on China because fentanyl is being sent to the U.S. from there.
Meanwhile, estimates from an extended Reuters poll showed that on average U.S. crude oil stockpiles were expected to have fallen by 1.6 million barrels in the week to Jan. 17.
Gasoline stockpiles were estimated to have risen by 2.3 million barrels last week, and distillate inventories were likely to have gained 300,000 barrels.
The poll was conducted ahead of the American Petroleum Institute industry group’s report and another from the Energy Information Administration at 12:00 p.m. ET (1700 GMT) on Thursday.
European wind shares fell on Tuesday (January 21).
The reports were delayed by a day due to the Martin Luther King Jr. Day federal holiday on Monday.
Pakistan and Saudi Arabia have reaffirmed their commitment to further strengthening the bilateral economic ties for shared prosperity.
The commitment was expressed when Finance Minister Muhammad Aurangzeb met with his Saudi counterpart Mohammad bin Abdullah Al-Jadaan on the sidelines of World Economic Forum Annual Meeting in Davos.
Muhammad Aurangzeb highlighted the key reform measures undertaken by the Government to promote economic stability and sustainable growth.
He briefed him on structural reforms, fiscal discipline and regulatory improvements that have contributed to an improved investment climate in Pakistan.
Earlier, Aurangzeb met Anna Bjerde, Managing Director of Operations at the World Bank.
They discussed cooperation between Pakistan and the World Bank, with a particular focus on Pakistan’s macroeconomic stability.
The finance minister emphasized the government’s strong partnership with the Bank and expressed hope that the World Bank would continue playing a key role in the country’s socio-economic development.
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