Asian equity markets retreated on Wednesday after U.S. stocks surged to fresh all‑time highs, buoyed by robust earnings expectations across technology and artificial‑intelligence sectors. The pullback highlights the continued influence of U.S. market momentum on regional investors.
Key market moves
In Tokyo, the Nikkei 225 fell 0.9% to 70,284.81. South Korea’s Kospi also slipped 0.9%, closing at 6,876.76. Hong Kong’s Hang Seng dropped 0.6% to 24,129.96, while Taiwan’s Taiex edged down 0.2% to 10,123.45. Shanghai’s market remained closed for a national holiday, and Australia’s S&P/ASX 200 inched up 0.1% to 8,740.10.
U.S. market strength
U.S. futures were largely unchanged, and oil prices rose modestly. The S&P 500 climbed 0.6% to a record 7,818.93, surpassing the August high. The Dow Jones Industrial Average added 0.5% to 51,521.28, and the Nasdaq Composite rose 0.4% to a new peak of 27,599.79.
“The rally reflected confidence that corporate earnings, particularly across technology and AI‑related sectors, can withstand elevated energy costs and restrictive interest rates,” said Ng Jing Wen of Mizuho Bank. “The resilience suggests investors continue to prioritize earnings momentum over near‑term inflation risks,” she added.
Economic backdrop
Despite concerns over the ongoing conflict with Iran, persistent inflation pressures and higher bond yields, the U.S. equity market has risen 23% since its March trough. Higher yields, currently easing to 5.28% on the 10‑year Treasury from 5.31% on Monday, reflect a modest retreat after a period of record‑high rates.
Oil prices remain elevated, with Brent crude up 0.9% at $101.49 per barrel and U.S. benchmark crude at $90.21 per barrel. The U.S. dollar strengthened slightly to 158.44 Japanese yen, while the euro slipped to $1.1238.
Corporate earnings drive optimism
Strong corporate earnings continue to underpin market confidence. Frozen‑food producer Lamb Weston reported quarterly profit and revenue that exceeded its own forecasts, sending its stock up 7.5%.
Analysts expect robust earnings for the July‑September quarter. FactSet data projects S&P 500 companies to deliver nearly 30% earnings‑per‑share growth year‑over‑year, marking a third consecutive quarter of more than 25% growth.
Potential risks
Market observers caution that a slowdown in earnings delivery could reverse recent gains. Some critics also warn of a possible bubble in artificial‑intelligence stocks, which have surged dramatically, exemplified by Nvidia’s 28.3% rise this year—roughly double the broader market’s gain.
Bond yields have offered some relief, with the 10‑year Treasury yield easing to 5.28% after previously reaching multi‑decade highs. However, any further tightening of monetary policy could pressure borrowing costs and weigh on economic growth.
Looking ahead
Investors will watch upcoming earnings reports, including Delta Air Lines’ third‑quarter results due Friday and a series of major bank disclosures slated for next week. Continued earnings strength will be critical to sustaining the current market rally amid lingering macro‑economic headwinds.
AP Business Writer Stan Choe in New York contributed to this report.
Original reporting: KTBS 3 (Shreveport) — read the source article.
