TOKYO – Asian shares were mixed on Wednesday after Wall Street’s frenzy around artificial intelligence and stronger-than-expected profit reports from big financial companies helped pushed U.S. stocks to their best level in more than 15 months.
Shanghai and Hong Kong fell on selling of property shares after troubled developer China Evergrande reported its total debts rose in the past two years to about $340 billion.
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In Hong Kong, New World Development fell 2.2%, Country Garden declined 0.7% and China Resources Land gave up 0.8%.
Hong Kong's Hang Seng dropped 1.2% to 18,782.40 while the Shanghai Composite index declined 0.3% to 3,189.81.
The property market, a major driver of growth in China, has languished after regulators reined in lending to try to bring debt in the industry under control
In Tokyo, the Nikkei 225 gained 0.8% to 32,759.60 while the Kospi in Seoul lost 0.1% to 2,604.12. Australia's S&P/ASX 200 climbed 0.6% to 7,324.00.
Shares rose in India and Bangkok.
On Tuesday, the S&P 500 rose 0.7% to 4,554.98 and its highest finish since early April 2022. The Dow Jones Industrial Average rallied 1.1% to 34,951.93 and the Nasdaq composite climbed 0.8%, to 14,353.64.
Microsoft was the biggest single force pushing up the S&P 500, by far. It rose 4% after announcing it will charge $30 per user per month for its Microsoft 365 Copilot, which Wedbush analyst Dan Ives called a “flex-the-muscles move.”
Wall Street has sent a select group of stocks soaring this year on hopes that AI will drive tremendous growth in profits and herald a revolution for the global economy. Besides Microsoft’s nearly 50% gain for the year, Nvidia has more than tripled.
Stocks in the financial industry also drove the market higher. Charles Schwab jumped 12.6% after reporting stronger profit and revenue for the spring than analysts expected. It was one of several big financial companies to report better results than forecast, including Bank of America and Morgan Stanley.
Masimo, which makes medical equipment and also runs a consumer audio business home to the Bowers & Wilkins and Denon brands, tumbled 20% after it said it expects to report weaker-than-expected revenue for the spring in part because of fewer patients at U.S. hospitals.
Wall Street's reporting season is just ramping up as companies tell investors how much profit they earned from April through June. The biggest question is whether the economy can avoid a long-predicted recession after the Federal Reserve cranked up interest rates to fight inflation.
Reports on the economy Tuesday came in mixed. One said that sales at U.S. retailers grew by less last month than economists expected, marking a slowdown from May’s growth.
So far, strong consumer spending has been one of the main bulwarks keeping the economy out of a recession. Economists said underlying sales trends, which exclude automobiles, gasoline and other items, were stronger than expected in June.
A separate report said U.S. industrial production contracted again last month. Economists had been forecasting a flat reading.
Altogether the data seemed to reinforce the heavy bet among traders that the Federal Reserve will raise its federal funds rate at its meeting next week, but that could be the final hike of this cycle.
High rates undercut inflation by bluntly slowing the entire economy and dragging downward on prices for stocks and other investments.
If the Fed does follow through on expectations and raises the federal funds rate next week to a range of 5.25% to 5.50%, it would be at its highest level since 2001. That would be up from its record low of nearly zero early last year.
But inflation has been slowing over the last year, and hopes are high on Wall Street that it will continue cooling enough to get the Fed to stop raising rates and perhaps begin cutting them next year.
In other trading Wednesday, U.S. benchmark crude fell 29 cents to $75.37 a barrel in electronic trading on the New York Mercantile Exchange. It climbed $1.58 to $75.66 a barrel on Tuesday.
Brent crude, the pricing basis for international trading, lost 19 cents to $79.44 a barrel.
The U.S. dollar climbed to 139.39 Japanese yen from 138.83 yen. The euro slipped to $1.1222 from $1.1230.
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AP Business Writer Stan Choe contributed.
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