Asian shares are mixed after Wall Street’s rally steadied

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HONG KONG (AP) — Shares were mixed Friday in Asia after Wall Street drifted higher as reports suggested the Federal Reserve may have more leeway to cut interest rates later this year to support the U.S. economy if it weakens under the weight of President Donald Trump’s high tariffs.

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U.S. futures and oil prices were little changed.

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Markets have calmed somewhat after the turmoil unleashed by Trump’s on-again, off-again tariffs offensive, aimed at compelling companies to base manufacturing inside the United States. But the policies are already taking a toll.

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The United Nations on Thursday forecast slower global economic growth this year and next, pointing to the impact of the tariffs and worsening trade tensions. U.N. economists also cited the volatile geopolitical landscape and threats of rising production costs, supply chain disruptions and financial turbulence.

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Tokyo’s Nikkei 225 lost 0.3% to 37,659.39 after the government reported that Japan’s economy contracted at a faster rate than expected in the first quarter of the year. Exports fell and consumer spending was flat, according to the data which showed a contraction of 0.7% from a year earlier.

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Hong Kong’s Hang Seng dropped 1% to 23,216.20 while the Shanghai Composite Index fell 0.6% to 3,360.82.

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E-commerce giant Alibaba tumbled 5.2% after the company’s financial performance missed forecasts.

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Seoul’s Kospi was nearly unchanged at 2,621.75 and the S&P/ASX 200 in Australia added 0.6% to 8,349.30.

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Taiwan’s Taiex gained 0.3%.

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Most U.S. stocks drifted higher in quiet trading Thursday following the jumble of mixedreports that offered little clarity on how the U.S. economy is managing Trump’s trade war.

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The S&P 500 rose 0.4% to 5,916.93, enough to extend its winning streak to a fourth day and to pull within 3.7% of its all-time high set earlier this year.

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The Dow Jones Industrial Average added 0.6% to 42,322.75, and the Nasdaq composite slipped 0.2% to 19,112.32.

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The reports did little to spell out whether the economy is heading into a recession, as many investors had been fearing, or shaking off the uncertainty after Trump called off many of his tariffs temporarily. Shoppers spent less at U.S. retailers last month than expected, while inflation was better at the wholesale level than economists had forecast.

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Other updates said U.S. manufacturing looks like it’s still contracting but fewer U.S. workers are applying for unemployment benefits than expected.

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Even though China and the United States recently agreed on a 90-day stand-down for many of their tariffs, frictions remain and it will take time for tariffs to fully show up in economic data.

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Fed Chair Jerome Powell warned in a speech on Thursday that the world “may be entering a period of more frequent, and potentially more persistent, supply shocks” that could goose inflation higher and present a “difficult challenge for the economy and for central banks.”