TOKYO (AP) — Asian stocks were mixed Tuesday ahead of the united states midterm elections Trading is likely to remain choppy in a week that brings new inflation data and other events that could rock markets.
Tokyo’s Nikkei 225 gained 1.4% to 27,914.21 on strong earnings reports. Seoul’s Kospi rose 1.1% to 2,398.02 and Australia’s S&P/AXS 200 gained 0.4% to 6,959.60.
Hong Kong’s Hang Seng fell 7 points to 16,588.79 while the Shanghai Composite Index lost 0.5% to 3,061.94.
Trading is likely to remain choppy in a week full of potentially market-shaking events, including US inflation data and the election, which could leave the The United States government was divided between Democrats and Republicans.
All seats in the US House of Representatives are up for election this year, along with roughly a third of the US Senate. At stake is control of both houses of Congress, currently under the Democratic leadership.
Voters also elect governors in most states this year. They will be in office in 2024 when the next presidential election is held and could affect electoral laws or vote certifications. Many state legislative and local authorities are also on the ballot.
A divided government is likely to lead to gridlock rather than big, sweeping policy changes that could upend fiscal and spending plans. Historically, when a Democratic White House has shared power with a divided or Republican Congress, stocks have seen stronger-than-usual gains.
On Monday, the benchmark S&P 500 index rose 1% to 3,806.80, while the Dow Jones Industrial Average gained 1.3% to 32,827.00 and the Nasdaq Composite added 0.9% to 10,564.52.
Analysts say a strong showing by Democrats in the election could lead to more spending to help the economy, which could boost inflation and force the Federal Reserve to continue raise interest rates to control prices.
It may take a while to get clarity due to the process of counting the votes that came in the mail.
A report scheduled for Thursday will provide an update on inflation across the country last month. That will influence what has been the main driver on Wall Street this year: what the Federal Reserve does with interest rates.
Economists expect the report to show the consumer price index rose 8% in October from a year earlier, slightly below September’s 8.2% inflation rate.
Higher rates slow down the economy by making it more expensive to buy a house, a car or anything else on credit, though they take time to kick in. Rate hikes could trigger a recession and tend to drag down the prices of stocks and other investments.
A fourth straight month of moderation in inflation from June’s 9.1% rate could allow the Federal Reserve some wiggle room to relax a bit. The Fed has said it may soon reduce the size of its hikes to half a percentage point, after pushing through four consecutive three-quarter point mega hikes.
Monday’s gains for Wall Street came despite a shaky performance from its most influential stocks. Apple rose 0.4% after falling earlier in the day. I had clients warned they will have to wait longer to get the latest iPhones after anti-COVID restrictions were imposed on a contractor’s factory in China.
Earnings reports are also causing stock prices to swing.
Summer earnings reporting season is nearly 85% complete, and S&P 500 companies are on track to deliver just over 2% growth. Analysts forecast a drop in S&P 500 earnings for the last three months of the year of almost 1.5%. They had been forecasting 4% growth at the end of September.
In other trading, benchmark US crude oil fell 33 cents to $91.46 a barrel in electronic trading on the New York Mercantile Exchange. It lost 82 cents to $91.79 a barrel on Monday.
Brent crude, the international price standard, fell 30 cents to $97.62 a barrel.
The US dollar rose to 146.64 Japanese yen from 146.63 yen. The euro fell to $1.0009 to $1.0016.
AP business writers Damian J. Troise and Stan Choe contributed.
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