Asian shares fall after weak earnings pull Wall St lower

TOKYO Asian shares fell Friday in muted trading as investors watched inflation closely.

Benchmarks fell in Tokyo, Seoul, Sydney and Hong Kong but rose in Shanghai and Mumbai. According to Friday’s government data,

Japan’s core consumer price rose 3.0% in September compared to a year ago. This was the largest increase in eight years. It would also have been the highest in more than 30 years if the impact of introducing and raising the consumption tax was excluded.

The Bank of Japan has kept an ultra-low interest rate policy, while the Federal Reserve and other central banks have been raising rates to counter surging prices. The Japanese central bank has been working to prevent deflation, which is the continuing downward spiraling in prices, until recently.

In currency trading, the U.S. dollar rose to 150. 25 Japanese yen from 150. 09 yen, adding to pressure on the BOJ to tweak its monetary policy since a weaker yen amplified rising prices due to the higher costs for imports. The euro was little changed at 97. 81 cents, inching down from 97. 87 cents.

Japan’s benchmark Nikkei 225 declined 0.2% in morning trading to 26,951.59. Australia’s S&P/ASX 200 shed 0.5% to 6,698.60. South Korea’s Kospi edged down 0.1% to 2,215.53. Hong Kong’s Hang Seng fell 0.1% to 16,256. 95, while the Shanghai Composite gained 0.5% to 3,048.97. Mumbai shares opened 0.3% higher.

” The overall mood is cautious with the pareing of gains on Wall Street and yields trending lower on a more hawkish outlook,” Yeap Jun Rong (a market strategist at IG) said in a report.

Treasury yields rose to multiyear highs. This trend has helped push rates higher for mortgages and other loans. The yield on the 10-year Treasury climbed to 4. 23% from 4. 14% late Wednesday and is at its highest level in 14 years. The yield on the Treasury’s two-year note, which tends towards predicting future Federal Reserve action, rose from 4. 61% from 4.56%. Investors around the globe remain concerned about inflation, and the possibility of recessions all over the world. Higher interest rates can discourage borrowing and investments, slow down economic activity, and lead to economies going into recession.

Wall Street stocks lost ground on Thursday, but the major indexes continued to gain after a strong two day rally earlier in the week.

The S&P 500 fell 0.8% to 3,665. 78 and the Dow Jones Industrial Average slipped 0.3% to 30,333.59. The Nasdaq composite fell 0.6% to 10,614.84. Small company stocks fell more than the broader market, pulling the Russell 2000 index 1.2% lower, to 1,704.39. Wall Street’s focus on

Corporate earnings was constant throughout the week, as investors attempt to gain a better understanding of how companies are doing amid the highest inflation in 40 years and how they see the economy moving ahead.

The results have been mixed.

“The earnings growth estimates for this quarter are 3.6% higher than they were one year ago,” stated Bill Northey (senior investment director at U.S. Bank Wealth Management). “Just a matter of months ago, the expectations were for 10% earnings growth in the third quarter. There has been a material decrease in the expected earnings growth for this year.

IBM grew 4.7% after third-quarter earnings beat analysts’ expectations. AT&T reported strong results and saw a 7.7% jump.

Tesla dropped 6.6% after it said it would miss its target for vehicle delivery this year. Union Pacific fell 6.8% after the railroad operator forecast slower growth. This suggests that the economy is slowing down. Rival CSX fell 3%. American Airlines reported its latest results and fell 3.8%.

Allstate slumped 12.9% after giving investors a disappointing financial update.

European markets closed higher after Liz Truss, the British Prime Minister, resigned in the wake of financial market turmoil and multiple policy U-turns. The U.S. job market is strong with the latest government data showing that the number of Americans applying to unemployment benefits fell last week, which is historically low. The Fed must keep raising interest rates because of the strong job market. The central bank has raised its key interest rate to a range of 3% to 3.25%. It was close to zero six months ago.

The increases are putting pressure on other areas of the economy, including the housing market, where mortgage rates are now at 15-year highs. Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate ticked up this week to 6. 94% from 6. 92% last week. Last year at this time, the rate was 3.09%. This is helping to halt a housing market that has been hot for years. According to the National Association of Realtors, September saw a drop in sales of previously occupied homes in the United States for the eighth consecutive month.

In energy trading, benchmark U.S. crude gained 31 cents to $84. 83 a barrel in electronic trading on the New York Mercantile Exchange. It lost 1 cent on Thursday to $84. 51 a barrel. Brent crude, the international standard, added 30 cents to $92. 68 a barrel.

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AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.