Asian stocks experienced a decline on Wednesday as most markets in the region were closed for a holiday. In contrast, U.S. stocks concluded their worst month since September.
Oil prices showed a decrease, while U.S. futures exhibited mixed performance.
In early trading, Tokyo’s Nikkei 225 index dropped by 0.8% to 38,089.09. This followed a milder shrink in Japan’s factory activity in April, with the manufacturing purchasing managers’ index from au Jibun Bank rising to 49.6 from 48.2 in March. A PMI reading below 50 indicates contraction, while 50 suggests no change.
The yen faced continued challenges, with the U.S. dollar rising to 157.89 Japanese yen from 157.74 yen on Wednesday.
Australia’s S&P/ASX 200 also experienced a decline of 1.2% to 7,574.20. However, other markets in the region were closed due to the Labor Day holiday.
On Tuesday, the S&P 500 recorded a 1.6% decline, marking its first losing month in the last six. It closed at 5,035.69 after experiencing a reversal in momentum from its record-setting performance at the end of March.
Stocks began to decline immediately as trading commenced, following a report indicating that U.S. workers saw greater gains in wages and benefits than anticipated in the first quarter of the year. While this signals a robust job market, it also fuels concerns about persistent inflationary pressures.
This comes after several reports throughout the year have shown that inflation remains high, leading traders to abandon hopes for multiple interest rate cuts by the Federal Reserve this year. Consequently, Treasury yields surged in the bond market, intensifying pressure on stocks.
Tuesday’s market losses accelerated towards the end of the day as traders made final adjustments before closing the month of April, and in anticipation of the Federal Reserve’s interest rate announcement scheduled for Wednesday afternoon.
Although no changes to the main interest rate are expected at this meeting, traders are eager to hear Fed Chair Jerome Powell’s outlook for the rest of the year.
In corporate news, GE Healthcare Technologies reported weaker-than-expected results and revenue for the latest quarter, leading to a 14.3% decline in its stock. F5 also dropped by 9.2%, despite reporting better-than-expected profits. Conversely, 3M rose by 4.7% after reporting stronger results and revenue than forecast.
