Asian stocks faltered on hopes of avoiding a recession

TOKYO – Asian stock markets were mixed on Thursday on hopes western economies can avoid a recession despite higher interest rates to cool inflation.

Hong Kong and Seoul advanced. Tokyo refused. Markets in China, India and Australia were closed for public holidays.

Wall Street ended Wednesday little changed after recovering from a slump earlier in the day.

Investors are optimistic that the US and European economies can avoid a recession, despite warnings from the Federal Reserve and other central bank officials that rate hikes to cool economic growth and inflation will continue for an extended period.

“There is growing confidence that the economy may not need a recession to tame the inflationary beast,” SPI Asset Management’s Stephen Innes said in a report.

Hong Kong’s Hang Seng rose 1.9% to 22,464.77, while Tokyo’s Nikkei 225 fell 0.1% to 27,362.75.

The Kospi in Seoul gained 1.5% to 2,465.64. New Zealand, Singapore and Jakarta advanced while Bangkok and Kuala Lumpur declined.

On Wall Street, the benchmark S&P 500 index fell less than 0.1% to 4,016.22 after recovering from a 1.7% loss in the morning.

The Dow Jones Industrial Average recovered from a similar decline to end up less than 0.1% to 33,743.48. The Nasdaq Composite fell 20.91 points, or 0.2%, to 11,313.36.

Analysts are forecasting that S&P 500 companies will report their first decline in quarterly earnings per share since 2020 at the start of the coronavirus pandemic over the next few weeks.

Microsoft helped lead the way down after forecasting lower-than-expected earnings. It fell 4.6% early in the day but rallied to end down 0.6%.

Texas Instruments slipped 1.1% after the company said it expected weaker demand across its non-auto market as a whole. At times it fell by up to 3.1%.

Traders expect the Fed to hike interest rates another 0.25 percentage point in its next update on February 1st.

That would be a further decrease in the increase range from 0.5 percentage points last month and four increases of 0.75 points earlier.

Many investors expect the Fed to ease its rate-hike plans as the economy slows and begin cutting rates before the end of this year. The Fed has said it will keep interest rates high at least until the end of the year to wipe out inflation.

In energy markets, the reference price for US crude rose 25 cents to $80.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents on Wednesday to $80.15. Brent crude, the price basis for international oil trading, rose 9 cents in London to $86.28 a barrel. In the previous session, it was down 1 cent to $86.12.

The dollar fell to 129.34 yen from 129.55 yen on Wednesday. The euro rose to $1.0921 from $1.0913.