Asian shares down on caution after modest US gains

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An employee of a bank walks by screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea, Thursday, Feb. 4, 2021. Asian shares mostly fell Thursday as caution set in over company earnings reports, recent choppy trading in technology stocks and prospects for more economic stimulus for a world battling a pandemic. (AP Photo/Lee Jin-man)

BANGKOK – Asian shares mostly fell Thursday as caution set in over company earnings reports, recent choppy trading in technology stocks and prospects for more economic stimulus for a world battling a pandemic.

Japan's Nikkei 225 slipped 0.6% in early trading to 28,473.26, while South Korea's Kospi dropped 1.2% to 3,091.58. Australia's S&P/ASX 200 slipped 0.6% to 6,785.10. Hong Kong's Hang Seng lost 0.6% to 29,108.59, while the Shanghai Composite was down 0.4% to 3,501.88.

Also on market players’ minds is the global vaccine rollout, which is becoming more organized in the U.S., but yet to play out in much of Asia, except for China, where the pandemic started.

“As the rally waned for the U.S. market, Asia markets can be seen left to their own devices into the Thursday session, and it appears that investors may be locking in some of the recent gains,” said Jingyi Pan, a senior market strategist for IG in Singapore.

Wall Street ended with modest gains, with the S&P 500 inched up 3.86 points, or 0.1%, to 3,830.17, after swinging between a gain of 0.6% and a loss of 0.3%. The tiny gain extended the benchmark index's winning streak to a third day.

The Dow Jones Industrial Average gained 36.12 points, or 0.1%, to 30,723.60. The tech-heavy Nasdaq slipped 2.23 points, or less than 0.1%, to 13,610.54. The index had briefly been above its all-time high set last week.

Smaller companies fared better than the broader market. The Russell 2000 small-caps index rose 8.26 points, or 0.4%, to 2,159.70. The index is up 9.4% this year, while the S&P 500 is up about 2% and the Nasdaq is up 5.6%.

Energy, communications and financial stocks helped lift the market. Those gains were primarily kept in check by declines in companies that rely on consumer spending and technology stocks.

Investors continued to watch shares of companies such as GameStop and AMC Entertainment, which have been targeted by a community of online investors seeking to force their stock prices higher. Both stocks rose modestly after plunging over the last two days. Both companies have been in the spotlight for more than two weeks as investors pushed the stocks to astronomical levels.

GameStop and other recently high-flying stocks notched modest gains Wednesday. GameStop rose 2.7% and AMC climbed 14.7%. The stocks have been caught up in a speculative frenzy by traders in online forums who seek to inflict damage on Wall Street hedge funds that have bet the stocks would fall. GameStop plunged 60% on Tuesday, and AMC Entertainment lost 41.2%.

“There’s a tug of war that’s been brewing for a week or so now, that markets are ripe for a correction and whether the events of last week are a precipitating event,” said Jamie Cox, managing partner at Harris Financial Group.

Stocks have been mostly rallying this week, an encouraging start to February after a late fade in January as volatility spiked amid worries about the timing and scope of another round of stimulus spending by the Biden administration, unease over the effectiveness of the government's coronavirus vaccine distribution and turbulent swings in GameStop and other stocks hyped on social media.

That volatility has subsided this week, with Wall Street focusing mainly on corporate earnings reports while it keeps an eye on Washington for signs of progress on a new aid package.

Democrats and Republicans remain far apart on support for President Joe Biden’s $1.9 trillion stimulus package, but investors are betting that the administration will opt for a reconciliation process to get the legislation through Congress.

Shares of Amazon dropped 2% even though the company reported a huge rise in quarterly profits. Amazon also said its founder and CEO Jeff Bezos would be stepping down as CEO to focus on broader work at the company. Google’s parent company, Alphabet, jumped 7.3% after reporting a blowout quarter as its digital advertising machine regained momentum.

Treasury Secretary Janet Yellen has called for a meeting with the Securities and Exchange Commission, Federal Reserve and others to discuss the recent volatility and to determine “whether recent activities are consistent with investor protection and fair and efficient markets,” White House press secretary Jen Psaki said.

In energy trading, benchmark U.S. crude gained 15 cents to %55.84 a barrel. Brent crude, the international standard, added 6 cents to $58.52 a barrel.

In currency trading, the U.S. dollar inched down to 105.02 Japanese yen from 105.06 yen. The euro cost $1.2036, down from $1.2040.

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AP Business Writers Damian J. Troise and Alex Veiga and AP Economics Writer Josh Boak contributed.