BANGKOK (AP) — Asian stocks were mostly down on Monday after China reported weaker-than-expected growth in the last quarter.
Markets in Japan were closed for a holiday, and the market in Hong Kong closed due to a typhoon. US futures and crude oil prices fell.
The Shanghai Composite Index fell 1.2% to 3,199.17 after China reported its economy grew at an annual rate of 6.3% in April-June. This is better than the 4.5% expansion in the January-March quarter, but well below expectations of more than 7%.
The economy is expected to slow further in the coming months, although investors expect action from Beijing to support growth.
Thus, “the data will be considered from the perspective of how it will influence policy decisions made at the next Politburo meeting at the end of July,” Stephen Innes of SPI Asset Management said in a commentary.
In Seoul, the Kospi fell 0.5% to 2,613.60, while Australia’s S&P/ASX 200 fell less than 0.1% to 7,300.40. Bangkok SET gained less than a point.
On Friday, Wall Street’s latest winning week came to a mixed end after stronger-than-expected earnings reports from several major U.S. companies.
The S&P 500 slid 0.1% to 4,505.42, falling from its highest closing level since April 2022. The Dow Jones Industrial Average rose 0.3% to 34,509.03 and the Nasdaq composite rose fell 0.2% to 14,113.70.
Insurance giant UnitedHealth Group rebounded 7.2% after saying spring earnings growth was better than expected.
JPMorgan Chase rose 0.6% after it said its spring profit rose more than expected thanks in part to its acquisition of struggling First Republic Bank. Wells Fargo fell 0.3% from an earlier gain after reporting stronger-than-expected second-quarter profit.
Earnings season is just beginning and once again Wall Street expectations are low. Analysts predict the worst drop in earnings per share for S&P 500 companies since the spring of 2020. It would mark a third consecutive quarter where profits have fallen.
Such expectations are essential for the financial markets, because one of the main factors driving the price of a stock is the profit made by the company. Wall Street nonetheless rebounded strongly this week on growing optimism about the other major lever driving stock prices: how much investors are willing to pay for every dollar of corporate earnings.
Two reports earlier this week showed that inflation continued to subside across the US economy in June. That bolstered investor hopes that the Federal Reserve is about to feel comfortable enough to halt its meteoric interest rate hike campaign.
The Fed has already raised its federal funds rate to a range of 5% to 5.25% from virtually zero at the start of last year. High rates reduce inflation by slowing the economy and putting downward pressure on stock prices and other types of investments.
The Fed is still expected to raise rates one more time at its next meeting in two weeks. But traders are widely betting that this will be the last upside of the cycle.
A report on Friday suggested consumers are feeling much better about the economy thanks to slowing inflation and a still strong job market. A preliminary reading of a University of Michigan survey showed consumer sentiment at its highest level since September 2021, although lower-income consumers are not feeling as positive.
Strong US consumer spending has been a key pillar in keeping the economy out of a recession. They continued to spend despite high interest rates as employers continued to hire more workers.
In other trading on Monday, the benchmark U.S. crude lost 65 cents to $74.76 a barrel in electronic trading on the New York Mercantile Exchange. It lost $1.47 to $75.42 a barrel on Friday.
Brent crude, the pricing basis for international trade, fell 72 cents to $79.15 a barrel.
The dollar slipped to 138.63 Japanese yen from 138.82 yen. It has recently weakened amid speculation that the Bank of Japan may soon change its ultra-loose monetary policy. This could narrow the gap between higher yields in other markets where interest rates have been raised sharply and Japan, where the benchmark rate has been held at minus 0.1% for a decade.
The Euro weakened to $1.1225 from $1.1229.