Asian markets were mixed in early trading Thursday following gains on Wall Street and ahead of the European Central Bank’s meeting.
U.S. stocks inched higher Wednesday despite largely disappointing earnings reports, with some experts saying confidence in the Federal Reserve – and in a potential interest-rate cut next week – is aiding the markets’ resilience.
Later Thursday, the ECB is scheduled to convene in President Mario Draghi’s last meeting before his term ends. No policy changes are expected after the ECB launched new stimulus measures just last month.
Investors took a moment to take a deep breath as there were no major developments on two major forces influencing global markets – the U.S.-China trade war and Brexit.
Japan’s Nikkei gained 0.6% and Hong Kong’s Hang Seng Index advanced 0.4%. The Shanghai Composite dipped 0.2% while the Shenzhen Composite slipped 0.3%. South Korea’s Kospi fell 0.2% while benchmark indexes in Taiwan , Singapore and Indonesia gained. Australia’s S&P/ASX 200 edged up 0.3%, while New Zealand’s NZX-50 inched up after falling sharply Wednesday following a warning from mining giant Rio Tinto that sparked a selloff.
Among individual stocks, SoftBank fell in Tokyo trading after announcing a takeover of WeWork the day before. Honda rose, along with Rakuten and Inpex . In Hong Kong, AAC gained, along with food processor WH Group and New World Development . Chip maker SK Hynix advanced in South Korea despite an 89% year-over-year plunge in third-quarter net profit, which was actually better than analysts feared. Rio Tinto and Oil Search gained in Australia. In New Zealand, Meridian Energy , the nation’s largest company by market cap, was stable after plunging 8% on Wednesday.
While it’s still early in this earnings season, traders are trying to gauge how much the U.S. trade war with China and a slowdown in global economic growth is hurting corporate America.
Some of the companies’ earnings topped analysts’ expectations. Others put traders in a selling mood after warning that the slowing global economy and trade tensions are hitting their profits.
“With the US-China trade talks quiet for now, U.S. earnings have driven volatility and market direction this week,” Jeffrey Halley of Oanda said in a commentary.
The lack of direction in earnings Wednesday was reflected in the market, which spent most of the day wavering between tiny gains and losses.
“Fewer than a quarter of the companies have reported, so there’s a lot more to come,” said Sam Stovall, chief investment strategist at CFRA. “But the results have been mixed so far, even with the bar being set as low as it was.”
The S&P 500 rose 0.3%, to 3,004.52. The benchmark index had been down about 0.2% before recovering toward the end of the day. The Dow Jones Industrial Average also rebounded from a midday drop, gaining 0.2%, to 26,833.95. The Nasdaq composite added 0.2%, to 8,119.79.
Analysts are still forecasting the S&P 500 index will end up showing a drop in earnings per share from a year earlier.
If they’re right, it would be the first time that earnings have fallen for three straight quarters since 2015-16, according to FactSet.
The weakest results are expected to come from companies that rely on the strength of the global economy, which has been slowing amid trade wars. Raw-material producers, technology companies and energy stocks are predicted to report drops of 10% or more, according to FactSet.
Analysts are forecasting stronger growth for communications companies and businesses that sell to consumers, which have been the strongest part of the economy.
Benchmark U.S. crude oil lost 46 cents to $55.51 per barrel in electronic trading on the New York Mercantile Exchange. It rose $1.49 to settle at $55.97 a barrel on Wednesday. Brent crude oil , the international standard, gave up 35 cents to $60.82. It gained $1.47 to close at $61.17 a barrel.
The dollar fell to 108.62 Japanese yen from 108.68 yen on Wednesday.