Asian stocks gain, following Wall Street’s advance
Stocks were higher in Asia on Friday, following gains on Wall Street, where the market is heading for its first weekly gain after three weeks of punishing losses.
Tokyo’s Nikkei 225 added 0.9% to 26,411.64 and Seoul’s Kospi jumped 1.8% to 2,356.38. Hong Kong’s Hang Seng rose 1.4% to 21,567.30 and the Shanghai Composite Index added 0.4% to 3,334.67.
In Australia, the S&P/ASX 200 gained 0.2% to 6,539.10. Shares also rose in India and Taiwan.
Market participants are eagerly awaiting US inflation data due next week. They appeared to ignore preliminary data showing moderation in activity in several countries, including Japan.
A report on Friday showed inflation in Japan remained at 2.1% in May, pushed higher by energy costs and a weaker currency. However, underlying core inflation, which excludes volatile energy and fresh food costs, remained at 0.8% and the central bank is unlikely to follow the Federal Reserve’s lead. US and other central banks by raising interest rates, analysts said.
The Bank of Japan “is not confident this will be sustainable as wage growth remains weak and rising energy costs weigh on corporate earnings and consumer sentiment,” said Capital Economics’ Marcel Thieliant. in a comment.
On Wall Street, trading was faltering as investors focused on another round of testimony before Congress from Federal Reserve Chairman Jerome Powell. He told a House committee that the Fed hoped to rein in the worst inflation in four decades without plunging the economy into a recession, but acknowledged that “that path has become increasingly difficult.”
The S&P 500 ended up 1% at 3,795.73 after losing as much as 0.4%. The Dow Jones Industrial Average rose 0.6% to 30,677.36 and the Nasdaq gained 1.6% to 11,232.19.
Small company stocks also gained ground. The Russell 2000 rose 1.3% to 1,711.67.
Trading has been turbulent in recent weeks as investors try to determine if a recession is looming. The benchmark S&P 500 index is currently in a bear market. This means that it has fallen more than 20% from its most recent peak, which was in January. The index has fallen for 10 of the past 11 weeks.
On Thursday, Powell stressed, “I don’t think a recession is inevitable.” He said it was “certainly a possibility” and that the central bank faced a more difficult task amid the war in Ukraine, essentially pushing the prices of oil and other commodities even higher and making the even more pervasive inflation.
Powell addressed Congress a week after the Fed raised its benchmark interest rate by three-quarters of a percentage point, its biggest hike in nearly three decades. Fed policymakers are also forecasting a faster pace of rate hikes this year and next than they expected three months ago, with its key rate expected to hit 3.8% by the end of the year. of 2023. That would be its highest level in 15 years.
The Labor Department reported Thursday that fewer Americans filed for unemployment benefits last week, though that was slightly more than economists expected. The strength of the job market is a relatively positive element in an otherwise weakening economy, with consumer confidence and retail sales showing increasing damage from inflation.
As higher prices stretch wallets, consumers are shifting their spending from big-ticket items like electronics to basic necessities. The pressure has been compounded by record high gasoline prices which show no signs of abating.
Big tech and healthcare companies have done much of the heavy lifting. Microsoft rose 2.3% and Johnson & Johnson 2.2%.
Energy stocks fell as the price of US crude oil fell 1.8%. Valero fell 7.6%.
Early Friday, benchmark U.S. crude oil rose 1 cent to $104.28 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international trade, fell 34 cents to $106.12 a barrel.
Bond yields fell significantly. The yield on the 10-year Treasury note, which helps fix mortgage rates, fell to 3.09% from 3.15% on Wednesday evening.
The US dollar fell to 134.73 Japanese yen from 134.94 yen. The euro fell from $1.0524 to $1.0535.
AP Business Writers Damian J. Troise and Alex Veiga contributed.