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HONG KONG, China – Asian stocks were mixed on Wednesday, with New York stocks hitting another record high, helped by data that boosted hopes for a U.S. interest rate cut, but cautious comments from Federal Reserve officials kept a lid on market expectations.
In Europe, stocks opened lower in London despite data showing that UK inflation has fallen to the Bank of England’s 2% target.
U.S. retail sales data for May fell short of expectations, pointing to signs of fatigue among U.S. consumers, a key driver of economic growth, suggesting that growth in the world’s largest economy is slowing, giving the central bank room to ease monetary policy.
The data slightly offset an unexpectedly large increase in U.S. payrolls, suggesting the labor market remains resilient despite a long period of rising U.S. interest rates and stubbornly high inflation.
read: US retail sales in May rose only 0.1% from April
The S&P 500 and Nasdaq hit more records, driven by surging demand from big technology companies, with chip giant Nvidia surpassing Microsoft to become the world’s most valuable public company.
Artificial BroadCast Unitedligence giant Nvidia has risen nearly 3,500% in the past five years, reaching a market value of $3.349 trillion. According to Bloomberg, one analyst predicts that Nvidia’s market value may even reach $5 trillion next year.
Market-friendly measures
Hong Kong stocks rose nearly 3% after recent weakness, as analysts said investors were hopeful new market-friendly measures would be announced at a China forum attended by China Securities Regulatory Commission Chairman Wu Qing and central bank Governor Pan Gongsheng.
Billy Leung of Global X ETFs said: “People are looking forward to positive policies and banking reforms to boost shareholder returns. I suspect these policies may be more important for Hong Kong-listed stocks.”
Stock markets also rose in Tokyo, Singapore, Seoul, Mumbai, Jakarta and Taipei, but fell in Shanghai, Sydney, Manila, Bangkok and Wellington.
read: UK inflation slows to BoE’s 2% target
London opened slightly lower. Investors were unfazed by the news that inflation hit 2% in May (in line with expectations). The pound was little changed.
Stock markets in Paris and Frankfurt also fell.
US Consumer Behavior
“The retail sales data clearly reflects a shift in US consumer behaviour towards being more conservative, feeling the pinch of rising interest rates, subdued wage growth and reduced savings,” said Rodrigo Catril of National Australia Bank.
“Just as importantly, we expect to see more of this in the coming quarters.”
The Fed’s so-called “dot plot” rate guidance shows officials expect just one rate cut by January, down from three in a March forecast. While some observers are optimistic the Fed will cut rates two or even three times, policymakers remain reluctant.
Fed Governor Adrienne Kugler said on Tuesday that policy is “sufficiently tight to help cool the economy and return inflation to 2% without causing a sharp contraction in economic activity or a significant deterioration in the labor market.”
St. Louis Fed President Alberto Musallem added that he would need to see “a period of favorable inflation, easing demand and expanding supply” before considering easing policy.
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“These developments may take months or even quarters to play out,” he warned.
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