Asian shares pull back, chilled by decline on Wall Street

Oct 26, 2021, 10:12 PM | Updated: Oct 27, 2021, 9:33 pm

Asian shares fell Thursday after a retreat on Wall Street as banks and health care companies pulled the S&P 500 and the Dow Jones Industrial Average back from their latest record highs.

Shares fell in all major regional markets and oil prices also declined.

In Seoul, the Kospi edged 0.1% lower, to 3,024.04, even Samsung Electronics reported its highest quarterly profit in three years thanks to continued robust demand for its computer memory chips.

Samsung’s dual strength in parts and finished products has allowed it to flourish during the pandemic as millions of people were forced to work at home. However, the company said it was dealing with “longer-than-expected” component shortages that may affect the demand for semiconductors during the current quarter.

Tokyo’s Nikkei 225 index lost 0.9% to 28,825.62. The Bank of Japan was expected to keep its monetary policy unchanged at a policy meeting that wraps up Thursday.

In Hong Kong, the Hang Seng gave up 0.3% to 25,550.84, while the Shanghai Composite index dropped 1% to 3,528.63. The S&P/ASX 200 shed 0.5% to 7,408.40.

Flaring cases of coronavirus in China and Singapore were adding to a general unease over the economic outlook, given signs that inflationary trends might lead central banks to move faster to tighten monetary policy.

In New York, investors were focusing on a mixed batch of earnings from various well-known companies including Microsoft, General Motors and Coca-Cola.

The S&P 500 slipped 0.5% to 4,551.68. More than three fourths of the companies in the benchmark index fell, with financial, health care and industrial stocks accounting for most of the decline. Those losses offset gains from communication services stocks and a mix of companies that rely on consumer spending.

The Dow Jones Industrial Average lost 0.7% to 35,490.69. Both it and the S&P 500 had logged record highs the day before.

Most of the blue-chip index’s stocks were in the red, led by Visa, which slumped 6.9% a day after reporting strong quarterly results.

The Nasdaq edged up less than 0.1% to 15,235.84, and the Russell 2000 index of small companies took the heaviest losses, falling 1.9% to 2,252.49.

Long-term bond yields fell significantly and weighed down banks, which rely on higher yields to charge more lucrative interest on loans. The yield on the 10-year Treasury fell to 1.53% from 1.61% late Tuesday. It was steady at 1.55% early Thursday.

The yield on the 30-year Treasury fell below 2% for the first time in a month to 1.96%, even though rates on shorter-term U.S. bonds, like the 2-year Treasury note, have been rising.

U.S. crude oil prices fell 2.4% and pushed energy stocks lower. Exxon Mobil dropped 2.6%.

U.S. benchmark crude lost $1.86 to $80.80 per barrel. Brent crude, the basis for international pricing, declined $2.12 to $81.75 per barrel.

The steady flow of corporate report cards will continue Thursday with industrial bellwether Caterpillar and technology giant Apple. Amazon and Starbucks will also report their results on Thursday.

Outside of earnings, investors will get an update on U.S. economic growth when the Commerce Department releases its report on third-quarter gross domestic product on Thursday.

Rising inflation remains a key concern for investors as they monitor earnings and the impact from supply chain problems and higher prices on businesses and consumers. Investors are also looking ahead to the Federal Reserve’s meeting next week to see how it moves forward with plans to trim bond purchases and its position on interest rates.

The central bank has maintained that inflation will prove to be “transitory” and tied to the economic recovery, though it has been more persistent than initially anticipated.

In other trading, the dollar fell to 113.62 Japanese yen from 113.83 yen. The euro rose to $1.1609 from $1.1603.

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Asian shares pull back, chilled by decline on Wall Street