Hurt by losses for Walmart and investor concern over the upcoming speech by US Federal Reserve chair Jerome Powell on the state of the economy had the Wall Street falling on the fifth consecutive day.
While hopes for any interest rate cut by the Fed remain bleak, all eyes are pinned on Powell’s speech on Friday in Jackson Hole, Wyoming, where chiefs of the world’s central banks are gathered for a meeting.
ING Economics, in a commentary, said the rate was broadly in line with market consensus. Inflation staying above 3 per cent raises chances of a rate hike as soon as October, it said.
Asian shares were also mixed on Friday with Tokyo’s Nikkei 225 having shed early gains and slipping 0.1 per cent to 42,597.94 after Japan's core inflation rate slowed to 3.1 per cent in July, from 3.3 per cent in June.
In Chinese markets, Hong Kong's Hang Seng index rose 0.4 per cent to 25,193.50. The Shanghai composite index climbed 0.7 per cent to 3,796.36.
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South Korea's Kospi rose 0.7 per cent to 3,163.20, while Australia's S&P/ASX 200 fell 0.3 per cent to 8,993.80. Traders sold to lock in gains after the benchmark surged to record highs in recent trading sessions.
Taiwan's TAIEX lost 0.3 per cent and India's BSE Sensex edged 0.1 per cent lower.
“The upshot is that the sands are arguably shifting, but Jackson Hole may not be where lingering hawkish restraint goes to die,” said Mizuho Bank in a commentary, adding, “In other words, Powell may stick to his guns on (interim) restraint.”
On Wall Street on Thursday, the S&P 500 slipped 0.4 per cent to 6,370.17. Its losses have been relatively modest, but it has not closed higher since setting a record on Aug. 14.
The Dow Jones Industrial Average dropped 0.3 per cent to 44,875.50, and the Nasdaq composite fell 0.3 per cent to 21,100.31.
The market’s heaviest weight was Walmart, which dropped 4.5 per cent after reporting a profit for the spring that fell short of analysts' expectations. Meanwhile, Nvidia and other Big Tech stocks held a bit steadier following two days of sharp swings.
In the bond market, Treasury yields rose after a report forced Wall Street to scale back hopes that the Federal Reserve may soon deliver relief by cutting interest rates.
The Fed Reserve remains concerned about inflation in the US which may be pushed higher by President Donald Trump’s tariffs, despite the country’s business activity having accelerated at the fastest rate so far this year.
Preliminary data from S&P Global also said tariffs helped push up average selling prices at the fastest rate in three years, another discouraging sign for inflation.
The hope on Wall Street has been that Powell may give hints on Friday that easier rates may be coming, which would be the first of the year and certainly give investment prices and the economy a boost by potentially making it cheaper to borrow to buy cars or equipment. But it could also risk worsening inflation.
However, a surprisingly weak report on job growth earlier this month suddenly made the job market a bigger worry. Trump, meanwhile, has angrily pushed for cuts to interest rates, often insulting Powell while doing so.
In other dealings early Friday, US benchmark crude lost 2 cents to USD 63.50 per barrel. Brent crude, the international standard, slid 2 cents to USD 67.65 per barrel.
The US dollar rose to 148.76 Japanese yen, from 148.37 yen. The euro slipped to USD 1.1591 from USD 1.1606.
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