BEIJING – Asian shares were mostly lower Wednesday as worries about the global economy flared after a tumble on Wall Street despite some better-than-expected earnings reports.
Tokyo, Sydney and Seoul declined while Hong Kong and Shanghai gained in afternoon trading. Oil prices rose.
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“From a banking crisis still hovering just beneath the surface to the realization Russia has long-range missiles that are incredibly accurate that no one has the capacity to stop, to the sharply higher China-U.S. tensions, more sanctions against both Russia and China, and the likely further unravelling of global trade and the reemergence of higher inflation, risks are huge,” Clifford Bennett, chief economist at ACY Securities, said in a commentary.
“None of this a pretty picture paints. Yet this is the reality of the current moment,” he said.
Japan's benchmark Nikkei 225 shed 0.7% to 28,416.66. Australia's S&P/ASX 200 slipped nearly 0.1% to 7,316.30. South Korea's Kospi inched down 0.1% to 2,487.20. Hong Kong's Hang Seng gained 1.1% to 19,829.04, while the Shanghai Composite added 0.1% to 3,268.47.
Japanese automaker Honda Motor Co.'s shares fell 0.7% after the company announced plans to step up its shift to electric vehicles.
The S&P 500 fell 1.6% on Tuesday to 4,071.63, breaking out of a weekslong lull. The Dow Jones Industrial Average dropped 1% to 33,530.83 while the Nasdaq composite sank 2% to 11,799.16.
First Republic Bank had the biggest loss in the S&P 500 by far and its stock nearly halved after it said customers withdrew more than $100 billion during the first three months of the year. That excludes $30 billion in deposits that big banks plugged in to build faith in their rival after the second- and third-largest U.S. bank failures in history.
The size of the drop in deposits has renewed worries about the U.S. banking system and the risk of an economy-sapping pullback in lending. Even though First Republic exceeded analysts’ earnings forecasts, its stock plunged 49.4%.
Earnings have so far topped economists’ modest expectations.
Looking ahead, forecasts are for the worst drop in S&P 500 earnings since the spring of 2020, when the pandemic froze the global economy. So Wall Street is focused just as much, if not more, on what companies say about their future prospects as what they say about the past three months.
High interest rates meant to get inflation under control put the brakes on the entire economy, hurting investment prices. Big chunks of the economy, apart from employment, already have begun to slow or contract.
A report Tuesday showed that confidence among consumers fell more sharply in April than expected, down to its lowest level since July. That's a discouraging signal when consumer spending makes up the biggest part of the U.S. economy.
The Federal Reserve meets next week and may raise interest rates at least one more time before pausing.
In the bond market, the yield on the 10-year Treasury fell to 3.39% from 3.50% late Monday. It helps set rates for mortgages and other important loans.
The two-year yield, which moves more on expectations for Fed action, fell to 3.95% from 4.11%.
In energy trading, benchmark U.S. crude added 69 cents to $77.76 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 59 cents to $81.36 a barrel.
In currency trading, the U.S. dollar fell to 133.71 Japanese yen from 133.72 yen. The euro cost $1.0988, inching down from $1.0977.