Yuri Kageyama, Associated Press
2 hours ago
A foreign exchange trader (left) walks past a screen displaying the Korea Composite Stock Price Index (KOSPI) in the foreign exchange dealing room at the KEB Hana Bank headquarters in Seoul, South Korea, on Friday, April 26, 2024. Asian stocks mostly rose on Friday despite concerns about the economic outlook and inflation in the US and other countries. (AP Photo/Ahn Young Jun)
TOKYO (AP) — Asian stocks were mostly higher Friday despite concerns about the economic outlook and inflation in the U.S. and the rest of the world.
The Bank of Japan ended its policy meeting without making any major changes, leaving the policy interest rate unchanged at a range of 0-0.1%. The central bank raised its key policy interest rate from -0.1% in March, citing signs that inflation was reaching the central bank's target of around 2%.
Japan's benchmark Nikkei 225 rose 0.4% to 37,780.35 in morning trading, while the dollar was trading at 155.54 yen, little changed from 155.58 yen.
While a weaker yen is a boon for Japan's big exporters like Toyota Motor Corporation, boosting overseas earnings when translated into yen, some Japanese officials, including Finance Minister Shunichi Suzuki, say excessive currency depreciation is a good thing. They have expressed concern that this may not be the case. Japan's economy in the long term.
In other currency trading, the euro rose to $1.0726 from $1.0733.
Wall Street fell on Thursday on concerns about a potentially toxic cocktail of persistently high inflation and a sluggish economy. The market was also hit by a sharp decline in the parent company of Facebook, one of the most influential stocks on Wall Street.
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 Index fell 0.6% to $15,611.76.
Metaplatforms, the company behind Facebook and Instagram, fell 10.6% even though it said its latest quarterly profit beat analysts' expectations. Investors instead focused on Meta's promised massive investment in artificial intelligence. While AI is stirring up excitement on Wall Street, Meta also provided a range of projected future earnings, with the midpoint below analysts' expectations, and increased spending.
Expectations were high for Meta, along with the other “Magnificent Seven” stocks that drove much of last year's stock market returns. A high bar needs to be reached to justify the high stock price.
The broader US stock market felt further upward pressure on US Treasury yields following a disappointing report that US economic growth slowed to an annual rate of 1.6% in the first three months of this year from 3.4% at the end of 2023.
This puts the S&P 500 on record after record this year, saying the economy can avoid a deep recession and support strong corporate profits, even if high inflation takes time to be fully brought under control. It ruined the core expectations that had been renewed.
This is what Wall Street calls a “soft landing” scenario, and there have been recent hopes for a “no-landing,” in which the economy avoids recession altogether.
Thursday's economic data is likely to be revised several times as the U.S. government tweaks the numbers. But the weaker-than-expected growth and higher-than-expected inflation is “a bit of a blow for people hoping for a 'no-landing' scenario,” said Brian Jacobsen, chief economist at Annex Wealth Management.
U.S. Treasury yields remained elevated as traders refrained from betting on the Federal Reserve cutting interest rates this year.
The yield on the 10-year U.S. Treasury rose to 4.70% from 4.66% just before the report, and from 4.65% late Wednesday.
Traders are primarily betting that the Fed will cut interest rates once or twice this year, according to data from CME Group. They entered this year expecting more than six. A series of reports this year showing that inflation is higher than expected has dashed those hopes.
Federal Reserve officials said they may keep key interest rates at their highest levels since 2001 for some time. Higher interest rates slow the overall economy and negatively impact investment prices, while lower interest rates could lead to a reacceleration of inflation.
This will put more pressure on companies to achieve greater profits.
In early Friday energy trading, benchmark U.S. crude oil prices rose 19 cents to $83.76 a barrel. Brent crude, the international standard crude, rose 22 cents to $89.23 per barrel.
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AP Business Writer Stan Cho contributed.