Asian Shares Mostly Decline After US Stocks Shuffle Lower

Japan's benchmark Nikkei 225 dipped 0.7% to 29,490.53 in early trading. Australia's S&P/ASX 200 edged up 0.2% to 7,381.40, while South Korea's Kospi slipped 0.6% to 2,944.52. Hong Kong's Hang Seng dropped 1.7% to 25,227.83. The Shanghai Composite shed 0.5% to 3,520.77.

Recent government data have shown the coronavirus pandemic continues to hurt the Japanese economy. A supply crunch in chips and other parts needed to produce autos, a mainstay of the world's third-largest economy, is one reason.

The damage to consumer spending brought on by recent government measures to close restaurants early and open theaters to limited crowds is another factor. Japan has never had a lockdown but has called periodically for a “state of emergency” to curb the spread of infections.

Junichi Makino, chief economist for SMBC Nikko Securities, said the Japanese recovery that many initially expected to get started this year may have to wait until fiscal 2022.

“But extreme pessimism is not called for. Auto production will likely get back to normal by the October-December quarter,” he said.

Investors are also watching the Bank of Korea policy-setting meeting scheduled for next week for whether the central bank will raise its key rate. Policymakers have hinted at such a move.

“Without a positive lead from Wall Street overnight and a relatively quiet day in terms of economic data, sentiments in the region may be on hold, potentially leading to some sideways movement,” said Yeap Jun Rong, market strategist at IG in Singapore.

On Wall Street, the S&P 500 fell 12.23 points, or 0.3%, to 4,688.67 after earlier drifting between a tiny gain and a 0.4% decline. It's sitting just 13.03 points below its all-time high set a week and a half ago.

The Dow Jones Industrial Average sank 211.17, or 0.6%, to 35,931.05, and the Nasdaq composite lost 52.28, or 0.3%, to 15,921.57.

A 4.7% drop for Visa was one of the heaviest weights on the market. It fell after Amazon said it would no longer accept U.K.-issued Visa credit cards amid a dispute about fees.

The majority of stocks in the S&P 500 also sank, while the smaller stocks in the Russell 2000 index dropped even more, down 1.2%. But gains for some heavyweight stocks helped soften the losses. Apple rose 1.6%, and Tesla climbed 3.3%. Because they're two of the biggest stocks on Wall Street by market value, their movements carry extra weight on the S&P 500.

Yields in the U.S. government bond market, the center of some of Wall Street's most turbulent action recently, pulled back following a week of big gains. The yield on the 10-year Treasury dropped to 1.59% from 1.63% late Wednesday.

Shorter-term yields also eased back, giving up a portion of their own recent surge. Last week, hotter-than-expected inflation across the economy pushed investors to move up their expectations for when the Federal Reserve would raise interest rates off their record lows.

Stocks have been powering mostly higher over the last month as companies have widely reported much stronger profits for the summer than analysts expected. Several big retailers joined the parade on Wednesday, including Lowe's, Target and TJX, which runs the T.J. Maxx and Marshalls stores. But the stock market's reaction wasn't uniform.

TJX rose 5.8% after reporting stronger than expected revenue and earnings for the latest quarter. Home improvement retailer Lowe's inched up 0.4% as it raised its revenue forecast for the year following strong third-quarter financial results.

But Target fell 4.7% even though it also reported better earnings than expected. The company said it made less profit off each $1 in sales during the quarter, versus a year earlier, as it got squeezed by higher merchandise and supply-chain costs, among other things.

Such pressures — and how much they hit companies' bottom lines— are under the microscope as relatively high inflation continues to sweep the world. Many companies have warned their profit margins could suffer due to supply-chain problems and higher costs for everything from workers' wages to raw materials.

A report on the housing market showed some of those pressures. Builders broke ground on fewer homes last month than in September, contrary to economists' expectations for growth. That could be an indication that supply shortages and higher costs are slowing the industry. But the number of building permits also rose by more than expected, perhaps showing that homebuilders see those pressures eventually easing.

In energy trading, benchmark U.S. crude fell 72 cents to $77.64 a barrel. Brent crude, the international standard, lost 32 cents to $79.96 a barrel.

In currency trading, the recent stall in the dollar's rally is helping put Asian markets in a wait-and-see mood. The U.S. dollar fell to 113.99 Japanese yen from 114.07 yen. The euro cost $1.1332, up from $1.1319.