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Today’s Stock Market Update: Asian Equities Display Varied Performance, Reacting Calmly to Strong US Inflation Figures

Asian markets exhibited a mixed performance on Thursday following a decline in U.S. stocks, driven by concerns that the recent uptick in inflation might signify a more troubling trend. Oil prices saw a slight uptick, while U.S. futures remained relatively flat.

In South Korea, shares saw minimal movement after the ruling conservative party faced a significant defeat in a parliamentary election. The Kospi index inched up by less than 0.1% to reach 2,706.96. The election outcome dealt a severe blow to President Yoon Suk Yeol, resulting in several high-profile resignations, including that of Prime Minister Han Duck-soo.

Meanwhile, in other parts of Asia, Tokyo’s Nikkei 225 index dropped by 0.4% to 39,442.63, and the Hang Seng index in Hong Kong slipped by 0.1% to 17,118.27. Conversely, the Shanghai Composite index in China gained 0.2% to reach 3,032.01, while Australia’s S&P/ASX 200 fell by 0.4% to 7,813.60. Bangkok’s SET index experienced a 0.3% decline, and Taiwan’s Taiex dropped by 0.1%.

On Wednesday, U.S. equities saw significant losses, with the S&P 500 falling by 0.9% to 5,160.64, the Dow Jones Industrial Average dropping by 1.1% to 38,461.51, and the Nasdaq composite declining by 0.8% to 16,170.36. The decline in stocks was triggered by a report indicating higher-than-expected inflation levels for the third consecutive month, leading to concerns about the potential impact on consumer prices and Federal Reserve policy.

Following the release of the inflation data, there was a notable increase in Treasury yields, causing bond prices to fall. The yield on the 10-year Treasury rose to 4.54%, while the two-year yield jumped to 4.97%. The surge in yields prompted traders to revise down expectations of rate cuts by the Federal Reserve, which initially forecasted multiple rate cuts through 2024.

The increase in interest rates had a significant impact on various sectors, particularly real estate investment trusts (REITs) and utility companies, which are typically sensitive to changes in interest rates. Real estate stocks within the S&P 500 registered a significant decline, with office owners like Boston Properties and Alexandria Real Estate Equities experiencing notable drops.

Amidst these developments, Delta Air Lines kicked off the earnings reporting season by delivering better-than-expected results, citing strong demand for flights worldwide. However, the airline refrained from raising its profit forecast for the full year, leading to mixed market reactions.

Additionally, in early trading on Thursday, U.S. benchmark crude oil remained unchanged at $86.21 per barrel, while Brent crude rose slightly by 2 cents to $90.50 per barrel. The U.S. dollar saw a slight decline against the Japanese yen, trading near a 34-year high, while the euro also experienced a minor drop against the dollar.

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