Asian stocks mixed after Wall Street losses

Markets in Asia were mixed on Tuesday after making significant gains on the previous days as technology stocks helped Nasdaq Composite extending gains for a second day on Wall Street.

The Nikkei 225 rose 0.78 percent and the Topix gained 0.3 percent as consumer prices in Japan’s capital jumped 4 percent in December on an annualized basis, beating expectations for a 3.8 percent rise. The Japanese yen slightly strengthened to last trade at 131.75 against the U.S. dollar, which reached a seven-month low earlier in the week.

In Australia, the S&P/ASX 200 fell 0.31 percent while South Korea’s Kospi struggled for direction and last traded 0.05 percent higher with the Kosdaq down 0.30 percent. Investors digested South Korea’s latest current account balance data from November, which shifted from a surplus to a deficit for the first time since August.

The Hang Seng Index in Hong Kong fell 0.51 percent. In mainland China, the Shanghai Composite was also down 0.22 percent while the Shenzhen Component was up 0.47 percent.

What happened in Wall Street?

The Nasdaq Composite skirted losses on Monday thanks to the gains in technology helped the as traders added to bets that inflation may be easing.

The Nasdaq was the only major index to end the day up as it got boosted by a nearly 6 percent rally in Tesla shares. The tech-heavy index gained 66.36 points, or 0.6 percent, to end at 10,635.65 points.

The Dow Jones Industrial Average dropped 112.96 points, or 0.3 percent, to end at 33,517.65 as defensive drug stocks like Merck and Johnson & Johnson weighed on the average. The S&P 500 lost 0.1 percent, or 2.99 points, to close at 3,892.09, but the information technology sector’s 1.1 percent gain help pare the index’s losses.

Monday’s moves follow a winning, shortened week for the three major indexes, with the Dow and S&P 500 posting their best weeks since November. A chunk of those gains came Friday on the back of the labor and service sector data that spurred hopes the economy was contracting enough to appease the Federal Reserve.

And Monday marked the fifth trading day of 2023, reminding investors of a classic Wall Street rule that suggests the market will end the year up if stocks perform well in the first five sessions. The S&P 500 has ended the year positive 83 percent of the times it finished the first five trading sessions up — and with an average gain of 14 percent, according to the Stock Trader’s Almanac. The broad index gained 1.1 percent over the first five trading days in 2023.

Later in the week, investors will watch for December’s consumer price index report coming Thursday and big bank earnings scheduled for Friday.

Was Lon Musk right about “market craziness”?

The rebound in the company’s stocks raises this question as the Tesla share price currently stands at $119.77. Last month, Musk had told employees not be “too bothered by stock market craziness”, a clear sign that he himself is focused on the losses.

A day earlier, Tesla’s sell-off had intensified, with the stock closing down 11 percent. It means Musk’s electric car company had its worst month, quarter and year on record, moving past Meta to become the worst-performing stock in 2022 among the most valuable tech companies.

Musk circulated the comments in a companywide email, telling the staffers that Tesla needs to “demonstrate continued excellent performance,” and that “long-term, I believe very much that Tesla will be the most valuable company on Earth!”

Tesla shares declined about 68 percent for the year and Musk has blamed Tesla’s declining share price in part on rising interest rates. But critics point to his Twitter takeover as a bigger culprit for the slide, which has wiped out about $675 billion in market cap this year as of Wednesday’s close.

In the last week of December, the drop in share price came after The Wall Street Journal reported that Tesla will continue a weeklong production halt at its Shanghai facility, facing a fresh onslaught of Covid cases within its Chinese workforce.

It was also reported that when Tesla’s Shanghai plant reopens in January, it will do so for just 17 days, in a break from Tesla’s established practices. Shanghai has been battered by a fresh wave of Covid infections this month.

Tesla shares have fallen 73 percent from their record high in November 2021. The stock is down 69 percent in 2022, more than double the decline in the Nasdaq. Among major carmakers, Ford is down 46 percent and General Motors has fallen 43 percent. Since its IPO in 2010, Tesla has only fallen in one other year, an 11 percent drop in 2016.

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