Asian stocks mixed after stock pullback on Wall Street

Stocks were mixed in Asia on Wednesday after a shaky day on Wall Street capped a month rocked by worries about a possible recession, inflation and rising interest rates.

Tokyo’s Nikkei 225 advanced 0.7% to 27,472.49. Japan’s parliament on Tuesday night passed a $21 billion supplementary budget to deal with soaring fuel and food prices following Russia’s invasion of Ukraine.

The supplementary budget, for the current fiscal year which started April 1, will fund part of a $48 billion emergency economic package the government passed in April. It includes subsidies to oil wholesalers to minimize the impact on consumers.

In Sydney, the S&P/ASX edged up 0.1% to 7,219.60 after the government announced the economy grew at an annualized rate of 3.2%, or a quarterly rate of 0. .8%, in the first quarter of the year.

That was slower than the 3.6% growth in the last quarter of 2021, but still relatively strong, analysts said.

“The solid first-quarter GDP growth confirms our view that the economy will weather higher interest rates and lower real incomes better than most anticipate,” said Capital’s Marcel Thieliant. Economics in a note.

Hong Kong’s Hang Seng fell 0.5% to 21,307.95 and the Shanghai Composite Index lost 0.2% to 3,178.96. Both indexes rose sharply on Tuesday as Shanghai eased its strict antivirus limits on businesses and other activities.

South Korean markets have been closed for a holiday. India’s benchmark rose while Taiwan and Thailand fell.

Oil prices rose after falling nearly $120 a barrel. Benchmark U.S. crude rose 75 cents to $115.43 a barrel in electronic trading on the New York Mercantile Exchange. It slipped 40 cents to $114.67 a barrel on Tuesday.

Brent crude, the price basis for international oil trade, gained 68 cents to $116.28 a barrel.

Underlining concerns about inflation, oil prices jumped earlier on Tuesday after the European Union agreed to block the majority of oil imports from Russia due to its invasion of Ukraine.

The more than 50% jump in oil prices so far this year is a big part of the high inflation sweeping the world. A report on Tuesday showed inflation in the 19 countries that use the euro hit 8.1% in May, the highest level since records began in 1997.

The S&P 500 fell 0.6% to 4,132.15, after recouping about half of its loss earlier in the day. The Dow Jones Industrial Average fell 0.7% to 32,990.12, while the Nasdaq composite slipped 0.4% to 12,081.39. Both also pared some of their losses after falling at least 1.4%.

Stocks of small companies feel more than the broader market. The Russell 2000 slipped 1.3% to 1,864.04.

The S&P 500 ended May with a gain of less than 0.1%, after falling 8.8% in April. That’s now 13.9% below its record set earlier this year.

Through mid-May, the S&P 500 fell to seven straight losing streaks for its longest streak since the dotcom bubble burst two decades ago. Softening data on the U.S. economy has heightened fears that high inflation will force the Federal Reserve to raise interest rates so aggressively that it will trigger a recession.

President Joe Biden met with Federal Reserve Chairman Jerome Powell on Tuesday, their first since Biden reappointed Powell to lead the central bank and weeks after the Senate confirmed a second term.

“My plan to fight inflation starts with a simple proposition: respect the Fed, respect the independence of the Fed,” Biden said.

Stocks have managed to avoid a full-fledged bear market, at least so far, with the S&P 500 yet to close more than 20% below its all-time high. Speculation has grown that the Fed may consider a pause in rate hikes at its September meeting.

US Treasury yields rose on reports that US consumer confidence was higher than economists expected and house prices rose more than expected.

The 10-year Treasury yield climbed to 2.87% from 2.75% Friday night.

Starting Wednesday, the Fed will begin allowing some of the trillions of dollars in Treasuries and other bonds it amassed during the pandemic to come off its balance sheet. Such a move should put upward pressure on long-term Treasury yields, and it’s one way the Fed is trying to stamp out inflation by slowing the economy.

In other trading, the dollar rose to 129.07 Japanese yen from 128.70 yen on Tuesday. The euro slipped to $1.0717 from $1.0735.

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AP Business Writers Damian J. Troise and Alex Veiga contributed.

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