Asian shares are mostly lower after US stocks retreat, but gold surges higher

Audio By Carbonatix

Shares were mostly lower in Asia on Wednesday after U.S. stocks sank to their first loss in eight days, losing momentum after the price of gold topped $4,000 per ounce for the first time.

The price of gold was up $49 at $4,053.40 an ounce by late afternoon Japan time. U.S. futures were little changed, while oil prices advanced.

The Japanese yen fell sharply against the dollar on expectations that Sanae Takaichi, the conservative lawmaker likely to become the next prime minister, will push to keep interest rates low.

The dollar rose to 152.39 yen from 151.90 yen, while the euro slipped to $1.1614 from $1.1659.

Tokyo's benchmark Nikkei 225 shed 0.5% to 47,734.99. It had jumped to new records earlier this week after the ruling Liberal Democrats chose Takaichi as their leader last weekend. She is expected to increase spending and to advocate for easier credit, possibly slowing efforts by the Bank of Japan to raise its key interest rate. It has remained near zero for years, even as inflation has exceeded its target of about 2%, outpacing wage increases.

“While the economic case for tighter monetary policy remains intact, we suspect that the Bank of Japan will use the pressure by Japan’s incoming government as an opportunity to delay rate hikes until January,” Marcel Thieliant of Capital Economics said in a commentary.

Lawmakers in Japan's lower house of parliament are due to elect a successor to Prime Minister Shigeru Ishiba later this month. The Liberal Democrats hold the most seats despite not having an outright majority, so Takaishi is expected to become the country's first female prime minister.

Elsewhere in Asia, Hong Kong's Hang Seng dropped 1% to 26,880.81 and the S&P/ASX 200 edged 0.1% lower to 8,947.60.

Markets in mainland China and South Korea were closed for holidays.

In Taiwan, the Taiex lost 0.5%.

On Tuesday, the S&P 500 fell 0.4% from its all-time high, closing at 6,714.59. The Dow Jones Industrial Average lost 0.2% to 46,602.98, and the Nasdaq composite gave up 0.7% to 22,788.36.

Tesla was the heaviest weight on the market and dropped 4.4% after unveiling cheaper versions of two of its electric car models. The stock gave back most of its leap from the prior day, when speculation and hype built after Tesla hinted at a coming product announcement.

Oracle also helped drag the market lower. It fell 2.5% after a news report suggested it’s making thin profit margins on a key line of business related to artificial-intelligence technology.

U.S. shares have rushed higher in recent months on hopes that the economy will remain resilient and that the Federal Reserve will continue to cut interest rates.

The rapid rise of artificial intelligence has helped fan buying enthusiasm, but also is raising worries that share prices may have shot too high.

On Tuesday, Dell climbed 3.5% after executives talked up the company’s opportunity for growth because of AI at an investment conference. Advanced Micro Devices rallied 3.8% to add to its surge from Monday, when it announced a deal where OpenAI will use its chips to power AI infrastructure. IBM rose 1.5% after announcing a partnership that will integrate Anthropic’s Claude AI chatbot into some of its software products.

Much is riding on expectations that the AI investment boom will pay off by making the global economy more productive and driving more growth. Without that increased efficiency, inflation could push higher due to upward pressure coming from the mountains of debt that the U.S. and other governments worldwide are building.

Investors have traditionally seen gold as a hedge against high inflation. Its price has soared more than 50% this year because of governments’ huge debt loads, political uncertainties and anticipation that the Fed will cut interest rates.

Also early Wednesday, U.S. benchmark crude oil was up 66 cents at $62.39 per barrel. Brent crude, the international standard, rose 63 cents to $66.08 per barrel.