TOKYO — Asian stock markets mostly retreated Wednesday, with key benchmarks in Tokyo, Seoul and Hong Kong registering declines after U.S. equities reached record highs on Tuesday.
Japan's Nikkei 225 index closed down 0.9 percent at 70,284.81. South Korea's Kospi lost 0.9 percent, ending at 6,876.76. Hong Kong's Hang Seng index fell 0.6 percent to 24,129.96, and Taiwan's Taiex edged 0.2 percent lower. Shanghai markets remained closed for a national holiday. Australia's S&P/ASX 200 rose 0.1 percent to 8,740.10.
The U.S. stock market advanced to record levels Tuesday despite ongoing concerns over the war with Iran, elevated inflation, and bond market pressures. The S&P 500 climbed 0.6 percent to 7,818.93. The Dow Jones Industrial Average added 0.5 percent to 51,521.28. The Nasdaq composite gained 0.4 percent to 27,599.79.
Ng Jing Wen, an analyst at Mizuho Bank, said the rally reflected investor expectations that strong corporate earnings, particularly in technology and artificial intelligence sectors, could withstand high energy costs and higher interest rates. Investors are prioritizing earnings momentum over inflation risks, Wen said.
Several headwinds that pressured markets in March persist. Oil prices remain elevated due to the war with Iran, exacerbating inflation. Bond yields have risen, increasing borrowing costs and potentially slowing economic activity.
Americans express widespread pessimism about the economy and cost of living, even as record stock prices provide some financial relief. Strong corporate earnings have consistently supported the market.
Lamb Weston, a frozen potato products producer, reported Tuesday that its latest quarterly profit and revenue exceeded its own projections and analyst expectations. The company's stock rallied 7.5 percent.
Companies across sectors are projected to report strong third-quarter results. Delta Air Lines is scheduled to report Friday, with several large U.S. banks reporting the following week.
Analysts anticipate S&P 500 companies will show nearly 30 percent growth in earnings per share compared to a year earlier, according to FactSet. If projections hold, it would mark the third consecutive quarter of earnings growth exceeding 25 percent.
If corporate performance falls short of expectations, stock prices could reverse from current record levels. Some market observers have raised concerns about potential overvaluation in artificial intelligence industry stocks.
