Asian shares retreated on Wednesday, following Wall Street's cautious stance after a wave of earnings reports. The benchmark Nikkei 225 in Japan tumbled by 1.8% during morning trading. Australia's S&P/ASX 200 also fell by 0.8%, while South Korea's Kospi experienced a 1.4% slide. Hong Kong's Hang Seng dipped by 1.9% and the Shanghai Composite lost 0.8%. Similarly, benchmark indexes in Singapore, Taiwan, and Indonesia all witnessed declines.

Meanwhile, in the United States, the S&P 500 closed down 0.3%, shedding 12.23 points to reach 4,576.73. Despite posting its fifth consecutive winning month, the Nasdaq composite fell 0.4%, or 62.11 points, to 14,283.91. On the other hand, the Dow Jones Industrial Average managed to eke out a gain of 0.2%, adding 71.15 points to reach 35,630.68 – despite most of the component stocks weakening.

There is a growing concern that expectations for the overall U.S. stock market have become overly optimistic following the S&P 500's impressive surge of more than 19% thus far this year. Stocks had soared to a 16-month high due to hopes that cooling inflation would prompt the Federal Reserve to halt interest rate hikes, thereby avoiding an anticipated recession.

While inflation has indeed moderated since the summer months and the economy has displayed remarkable resilience, critics warn that there is no guarantee inflation will continue to cool at the same pace. They argue that stock prices have risen too rapidly and too far, posing a potential risk.

Mixed Reports on the Economy

Reports on the economy released on Tuesday yielded mixed results. While the number of job openings advertised across the country saw a slight dip in June, contrary to economists' expectations of a rise, the job market as a whole remains strong. This resilience has helped prevent the economy from slipping into a recession thus far.

One report focused on the manufacturing industry, published by the Institute for Supply Management. According to the findings, July witnessed a contraction that was slightly worse than economists had anticipated, though not as severe as what was observed in June. Another report from S&P Global echoed this sentiment, indicating that U.S. manufacturing continues to decline.

However, despite these challenges, producers seem to be unconcerned about the possibility of a recession and are actively planning for brighter days ahead. Chris Williamson, the chief business economist at S&P Global Market Intelligence, expressed optimism regarding their behavior.

In the bond market, the yield on the 10-year Treasury reached 4.03%, rising from 3.97% at Monday's close. This increase has implications for mortgage rates and other significant loans.

Turning to energy trading, benchmark U.S. crude (CLU23) experienced a boost of 93 cents, reaching $82.30 per barrel. Meanwhile, Brent crude (BRNV23), the international standard, also climbed 92 cents to settle at $85.83 per barrel.

In currency trading, the U.S. dollar (USDJPY) made a slight gain against the Japanese yen, rising to 143.21 yen from 142.83 yen.

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