Asian indexes mixed in choppy trading, echoing Wall Street

Asian shares are mixed in choppy trading, as inflation worries and the war in Ukraine had investors partly optimistic while staying cautious

Asian shares were mixed in choppy trading Thursday, as inflation worries and the war in Ukraine had investors partly optimistic while staying cautious.

Benchmarks rose in Japan, South Korea and Australia, boosted by the overnight rally in Europe and in the Dow in the U.S. Investors were also watching South Korean trade numbers for April, which showed a trade deficit, although both imports and exports rose.

Chinese President Xi Jinping, speaking at a forum of Asian leaders, said his government supports talks to resolve international disputes, but opposes the use of sanctions. Xi’s comments were China’s latest attempt to describe an approach to Russia’s bloody invasion of Ukraine.

Beijing has backed Moscow, refusing to call the conflict an invasion and saying Russia was provoked by NATO’s expansion.

What central banks may indicate on interest rates and inflation was also of concern, analysts said.

“Market focus will remain on inflation and the Ukraine-Russia situation ” ahead of the Thursday IMF panel discussion with U.S. Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde, said Lavanya Venkateswaran of Mizuho Bank in Singapore.

Japan's benchmark Nikkei 225 jumped 1.2% to finish at 27,553.06. Australia's S&P/ASX 200 added 0.3% to 7,592.80. South Korea's Kospi surged 0.4% to 2,729.04. Hong Kong's Hang Seng slipped 1.8% to 20,568.12, while the Shanghai Composite fell 1.8% to 3,095.62.

Wall Street's major stock indexes ended mixed on a day dominated by the drop in Netflix shares, which lost more than a third of their value after the company reported its first subscriber loss in more than a decade and predicted more grim times ahead.

The S&P 500 slipped 0.1% after a late-afternoon fade, while the Nasdaq fell 1.2%. The Dow Jones Industrial Average rose 0.7%, having received a bump from IBM, which added 7.1% after reporting quarterly results that beat analysts’ estimates.

Netflix stock is now down 67% from the all-time high it reached in November. It weighed heavily on the S&P 500, outweighing gains elsewhere in the benchmark index, and hit the communication services sector the hardest, pulling it 4.1% lower.

“While it is in communication services, it is also a discretionary stock, clearly, in that it's one of those things people buy because they want, not because they have to,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.

Health care stocks made some of the biggest gains. CVS rose 2.7% and medical device maker Boston Scientific added 3%. Banks and household product makers also bucked the market's overall decline. JPMorgan Chase rose 0.4%, while Charmin- and Dawn-maker Procter & Gamble rose 2.7% after beating analysts’ quarterly earnings forecasts.

Tesla rose 4% in after-hours trading after reporting first-quarter net earnings that were over seven times greater than a year earlier. The electric vehicle and solar panel company benefited from strong sales despite global supply chain kinks and pandemic-related production cuts in China.

All told, the S&P 500 slipped 2.76 points to 4,459.45, and the Nasdaq fell 166.59 points to 13,453.07. The Dow rose 249.59 points to 35,160.79.

Smaller company stocks held up better than the broader market. The Russell 2000 added 7.42 points, or 0.4%, to 2,038.19.

Investors continue focusing on the latest round of corporate earnings as they try to determine how companies are dealing with rising inflation and cost pressures. American Airlines and Union Pacific are due to report results on Thursday.

Inflation has been putting increasing pressure on a wide range of industries and increasingly squeezing consumers.

New Zealand’s inflation rate hit a 30-year high of 6.9%, driven by housing and gas. Statistics New Zealand reported that the cost of building new homes was up 18% when compared with a year ago, while gas prices were up 32%. The annual increase in prices was the highest since 1990, the agency said. Inflation has been rising in developed nations, including in the U.S., where it hit a four-decade high of 8.5% in March.

Rising prices have prompted the Federal Reserve and other central banks to raise interest rates to help temper inflation’s impact. The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks.

U.S. benchmark crude added 19 cents to $102.75 a barrel. It rose 0.2% Wednesday, now up nearly 40% for the year and pushing gasoline prices higher. Brent crude, the international standard, jumped $1.53 to $108.33 a barrel.

Wheat prices are also up 41% for the year and that has the potential to increase prices for a wide range of food products globally.

In currency trading, the U.S. dollar rose to 128.15 Japanese yen from 127.93 yen. The euro cost $1.0860, inching up from $1.0853.

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