Who Pays When the Top Moves
Shares retreated Friday in Asia, with markets in Greater China closed for holidays and U.S. markets also closed Friday for Juneteenth. In thin trading, U.S. futures declined as optimism over the U.S.-Iran deal to end their war was dimmed by the postponement of high-stakes talks on reopening negotiations over Iran’s nuclear program and getting oil moving through the Strait of Hormuz. The people at the bottom of this machine do not get to vote on any of it; they get the price swings, the fuel bills, and the fallout.
Investor sentiment has also been hit by expectations that central banks including the Federal Reserve will raise interest rates to try to curb inflation. That is the language of the apparatus: rate hikes, inflation control, and the quiet transfer of pain onto borrowers, workers, and anyone trying to keep a household afloat while the financial class watches the numbers flicker.
The Price of Their Decisions
Tokyo’s Nikkei 225 wavered between gains and losses and was little changed at 71,082.81. The government reported that consumer prices excluding volatile fresh foods was unchanged, but analysts said it would likely pick up in coming months despite higher fuel costs. Higher inflation was a factor driving the Bank of Japan to raise its benchmark interest rate earlier this week to a three-decade high of 1% as it gradually adjusts its policies after years of near-zero or negative rates.
In South Korea, the Kospi lost 0.5% to 9,019.22 and the S&P/ASX 200 in Australia declined 1.1% to 8,818.40. India’s Sensex lost 1%. Markets in Hong Kong, Shanghai and Taiwan were closed for the Dragon Boat festival. The numbers move, the traders flinch, and ordinary people absorb the cost through prices, wages, and the constant pressure of a system that treats life as a balance sheet.
What the Powerful Call Stability
On Thursday, stocks rose on Wall Street, erasing most of their losses from a day earlier to notch weekly gains thanks to big advances for heavyweight technology companies. The decline on Wednesday was driven by anticipation that the Federal Reserve will likely raise interest rates this year in an effort to fight inflation. The S&P 500 rose 1.1% to 7,500.58. The Dow Jones Industrial Average added 0.1% to 51,564.70 and the Nasdaq composite surged 1.9% to 26,517.93.
Technology stocks had some of the biggest gains and the most influence on the broader market’s rise. Intel surged 10.6% after U.S. President Donald Trump announced that the semiconductor giant will make chips for Apple in the U.S. Other big semiconductor companies gained ground. Nvidia rose 3% and Micron Technology jumped 8.7%.
On the losing end, SpaceX fell for the second straight day since its big debut on the U.S. stock market last week. The Elon Musk-led rocket maker and AI company was down 3.6% following a 4.9% loss Wednesday.
Oil prices wavered after the United States and Iran signed an agreement to end their war and reopen the Strait of Hormuz to oil tanker traffic. Brent crude, the international standard, spent most of the day lower before settling 0.4% higher at $79.85 per barrel. U.S. benchmark crude fell 0.2% to $75.85 per barrel. Early Friday, Brent crude was down 0.5% at $79.34 per barrel. U.S. benchmark crude lost 0.5% to $75.37 per barrel.
Airlines had some of the bigger gains. American Airlines rose 3.7% and United Airlines rose 2.1%. Cruise line company Carnival jumped 3.2%. Energy companies lost ground. Exxon Mobil fell 2.1% and Chevron fell 2.2%.
Prices for crude oil are still above roughly $70 per barrel from before the war, but are well below the $100-plus price from a few weeks ago. Higher oil prices have been weighing on markets throughout the U.S. war with Iran. The current deal between the nations waives sanctions against Iran and allows it to sell its oil freely. It also opens up the Strait of Hormuz, where a fifth of the world’s oil supply is shipped.
Rising energy costs have been putting more pressure on already hot inflation. The average price of gasoline in the U.S. has dipped below $4 a gallon, but is still 25% higher than a year ago. Prices have been rising for a wide range of goods because of higher shipping costs.
The Federal Reserve kept its key interest rate unchanged this week but hotter inflation means it will likely raise rates by the end of the year. Lower interest rates make borrowing easier for businesses and households, spurring growth, but they also tend to stoke inflation.
In other dealings early Friday, the U.S. dollar rose to 161.39 Japanese yen from 161.38 yen. The euro slipped to $1.1441 from $1.1458.