Asian Stocks Mixed After Wall Street's Muted Trading

Tokyo, May 14 (AP) Asian shares were mixed in muted trading on Tuesday after US stock indexes were little changed ahead of the release of inflation data.

Japan's benchmark Nikkei 225 lost early gains and was trading less than 0.1 per cent higher at 38,194.38.

Australia's S and P/ASX 200 slipped 0.2 per cent to 7,731.40.

South Korea's Kospi was little changed, inching up less than 0.1 per cent to 2,726.76.

Hong Kong's Hang Seng was up less than 0.1 per cent at 19,115.78, while the Shanghai Composite lost nearly 0.3 per cent to 3,139.89.

Investors were watching for indicators on inflation to gauge the direction of economic growth, as well as the strength of the dollar.

“Today marks a significant day for both Germany and the US as they are set to unveil crucial economic data,” said Luca Santos, market analyst at ACY Securities, referring to consumer price data from Germany and producer costs in the US.

“Despite their different focuses, both indices offer insights into how inflation is shaping society,” said Santos.

On Monday, the S and P 500 edged down less than 0.1 per cent, to 5,221.42 after flipping between small gains and losses through the day. It remains within 0.6 per cent of its record set at the end of March.

The Dow Jones Industrial Average slipped 0.2 per cent to 39,431.51, and the Nasdaq composite rose 0.3 per cent, to 16,338.24.

Biopharmaceutical company Incyte jumped 8.6 per cent after saying it would buy back up to USD 2 billion of its stock. It's the latest big company to say it's returning cash to shareholders through such purchases, which boost the amount of earnings that each remaining share is entitled to.

GameStop soared 74.4 per cent in a swing reminiscent of its maniacal moves from three years ago, when hordes of smaller-pocketed investors sent the stock's price way above what many professional investors considered rational.

Stocks have broadly rallied this month following a rough April on revived hopes that inflation may ease enough to convince the Federal Reserve to cut its main interest rate later this year.

A key test for those hopes will arrive on Wednesday, when the US government offers the latest monthly update on inflation that households are feeling across the country.

Other reports this week include updates on inflation that wholesalers are seeing and sales at US retailers. They could show whether fears are warranted about a worst-case scenario for the country, where stubbornly high inflation forms a devastating combination with a stagnating economy.

Hopes have climbed that the economy can avoid what's called “stagflation” and hit the bull's eye where it cools enough to get inflation under control but stays sturdy enough to avoid a bad recession. Federal Reserve Chair Jerome Powell also gave financial markets comfort when he recently said the Fed remains closer to cutting rates than to raising them, even if inflation has remained hotter than forecast so far this year.

A stream of stronger-than-expected reports on U.S. corporate profits has helped support the market. Companies in the S and P 500 are on track to report growth of 5.4 per cent for their earnings per share in the first three months of the year versus a year earlier, according to FactSet. That would be the best growth in nearly two years.

Earnings season has nearly finished, and reports are already in for more than 90 per cent of companies in the S and P 500. But this upcoming week includes Walmart and several other big names. They could offer more detail about how US households are faring.

Worries have been rising about cracks showing in spending by US consumers, which has been one of the bedrocks keeping the economy out of a recession. Lower-income households appear to be under particularly heavy strain amid still-high inflation.

The Biden administration is expected to announce this week that it will raise tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China, according to people familiar with the plan. Tariffs on electric vehicles, in particular, could quadruple to 100 per cent.

In energy trading, benchmark US crude added 4 cents to USD 79.16 a barrel. Brent crude, the international standard, rose 3 cents to USD 83.39 a barrel.

In currency trading, the US dollar rose to 156.43 Japanese yen from 156.20 yen. The euro cost USD 1.0790, down from USD 1.0793.