Stock market today: Asian benchmarks are mixed as Tokyo sips on strong yen

TOKYO (news agencies) — Asian shares traded mixed Thursday as Tokyo’s benchmark plunged as the U.S. dollar sank against the yen.

Regional investors are also digesting the rally on Wall Street that came on hopes U.S. cuts to interest rates will be arriving soon.

A strong yen is a plus for Japan’s purchases but hurts the nation’s giant exporters like Toyota Motor Corp., by eroding the value of overseas profits.

Japan’s benchmark Nikkei 225 dipped 2.5% to 38,126.33. Australia’s S&P/ASX 200 edged up 0.3% to 8,114.70. South Korea’s Kospi rose 0.3% to 2,777.68. Hong Kong’s Hang Seng slipped less than 0.1% to 17,340.31, while the Shanghai Composite lost 0.2% to2,933.81.

In currency trading, the U.S. dollar rose to 150.21 Japanese yen from 149.92 yen. The euro cost $1.0815, little changed from $1.0830. The dollar had been trading at 160-yen levels several weeks ago. But that reversed course as anticipation grew for a Bank of Japan rate cut, which came Wednesday.

Toyota stock sank 8.5%, while Nintendo fell 3.4% and Sony 3.3%.

Analysts said indications from the Federal Reserve were that rate cuts were coming.

“A September cut is now priced in with certainty, and almost three cuts are priced in by the year-end,” said Robert Carnell, regional head of research Asia-Pacific at ING Economics.

On Wall Street, the S&P 500 jumped 1.6% for its best day since February. The Dow Jones Industrial Average rose 99 points, or 0.2%, and the Nasdaq composite soared 2.6%.

The widespread gains came as Treasury yields eased in the bond market after the Federal Reserve gave the clearest indication yet that it could begin lowering interest rates in September. Fed Chair Jerome Powell said policy makers are “getting closer to the point” of comfort about inflation where they could cut rates for the first time since COVID-19 crashed the economy.

“We think that the time is approaching,” Powell said. “And if we do get the data that we hope we get, then a reduction in our policy rate could be on the table at the September meeting.”

After the Fed voted to keep interest rates steady on Wednesday, as was widely expected, Powell spent much of an ensuing press conference discussing the risks of both moving too early or too late with rate cuts. One could allow inflation to reaccelerate, while the other could cause unnecessary pain for the economy and ultimately throw Americans out of their jobs.

After keeping its main interest rate at a two-decade high for roughly a year, speculation may rise that the Fed waited too long. That “has the potential to add to the stock market’s choppiness as we head toward what is historically its most volatile period,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.

For Wednesday, though, the dominant mood on Wall Street was jubilance.

Advanced Micro Devices rallied 4.4% after reporting better profit and revenue for the latest quarter than analysts expected, thanks in part to accelerating artificial-intelligence business. That helped drive Nvidia, the chip company that’s become the poster child for Wall Street’s frenzy around AI, up 12.9% a day after it lost 7%.

How such Big Tech stocks perform matters a lot because they’re Wall Street’s most valuable companies, and that gives them the biggest sway on the S&P 500. A handful of these stocks, known as the “Magnificent Seven,” drove the U.S. stock market to dozens of records this year, even as many other stocks struggled under the weight of high interest rates. But they ran out of momentum this month amid criticism they had gotten too expensive and expectations had run too high.

Such criticism hasn’t gone away, and Microsoft fell 1.1% despite reporting profit and revenue for the latest quarter that edged past analysts’ expectations. Growth in its Azure cloud-computing business fell a bit shy of analysts’ forecasts. That followed earlier profit reports from Tesla and Alphabet that investors found underwhelming, which raised concerns that other Magnificent Seven stocks could also fail to impress.

Meta Platforms rose 2.5% as investors waited for its profit report, which arrived after trading closed for Wednesday. Amazon and Apple will follow on Thursday, and each rose at least 1.5%.

Stronger-than-expected profit reports from companies outside the Magnificent Seven also helped lift the market.

Match Group jumped 13.2% after saying its user trends for Tinder are stabilizing and reporting results for the latest quarter that roughly matched analysts’ expectations.