Asian shares mostly fall as investors watch for inflation

TOKYO — Asian shares were mostly lower Friday in muted trading, as investors kept an eye on inflation and awaited the outcome of a Communist Party congress in China.

Benchmarks fell in most regional markets but rose in Mumbai.

China’s ruling Party Congress will conclude Saturday with the endorsement of leader Xi Jinping, who will remain in office indefinitely. This meeting, which is held every five years, sets the country’s agenda for the next five years and can signal possible changes in policy direction. One change that is not on the agenda is the removal of severe COVID rules, which are likely to disrupt business and personal life for many months.

In other developments, Japan‘s core consumer prices rose 3.0% in September from a year earlier, according to government data released Friday. 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 maintains an ultra-low interest rates policy while the Federal Reserve and other central bank raise rates to combat rising 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. 38 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. 76 cents, inching down from 97. 87 cents.

Japan’s benchmark Nikkei 225 declined 0.4% in afternoon trading to 26,892.67. Australia’s S&P/ASX 200 shed 0.8% to 6,676.80. South Korea’s Kospi edged down 0.3% to 2,212.61. Hong Kong’s Hang Seng fell 0.8% to 16,157. 32, while the Shanghai Composite gained 0.2% to 3,041.21. Shares rose 0.4% in Mumbai.

” 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 have risen to multiyear highs, a trend that’s helped push rates higher on 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 remain concerned about inflation, since higher interest rates tend to discourage borrowing and investments, slowing economic activity. This could lead to recession.

Stocks on Wall Street lost ground Thursday.

The S&P 500 dropped 0.8%, while the Dow Jones Industrial Average fell 0.3%. The composite Nasdaq fell 0.6% while the Russell 2000 lost 1.2%.

Corporate earnings remain a big focus for Wall Street, and the results have been mixed so far.

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

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. 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.

In energy trading, benchmark U.S. crude fell 8 cents to $84. 43 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, gave up 2 cents to $92. 36 a barrel.