Asia shares rise as Wall Street on track to end loss streak
TOKYO — Asian benchmarks rose Thursday as investors were encouraged by a rally on Wall Street, which is on track for breaking a three-week losing streak.
Japan’s benchmark Nikkei 225 surged nearly 2.0% in morning trading to 27,964.16. Australia’s S&P/ASX 200 gained 0.8% to 6,783.80. South Korea’s Kospi edged up 0.4% to 2,385.55. Hong Kong’s Hang Seng slipped 0.3% to 18,986. 70, while the Shanghai Composite rose nearly 0.1% to 3,248.76. Market watchers will be reassured by Japan’s revised seasonally adjusted gross domestic product (or GDP) for the second quarter. This was revised upwards to an annual rate 3.5% growth, better that the initial estimate of 2.2%.
Data revealed that private consumption and business spending are still strong in Japan’s third-largest country. It has grown for three consecutive quarters. The GDP, which is the sum of all the country’s products or services, saw its quarterly growth increase to 0.9%, from 0.5%. The annual numbers show how much the economy would have grown if this quarterly rate was to continue for one year.
“Economic conditions will continue to be under focus, with China’s trade imbalance data yesterday revealing challenges both in external and domestic demand,” Yeap Jun Rong (market strategist at IG Singapore), said referring to Wednesday’s Chinese data.
Investors will also be watching for any changes in interest rates at the European Central Bank meeting and for comments from Jerome Powell, the U.S. Fed Chair, later Thursday.
On Wall Street, the S&P 500 rose 1.8%, its biggest single-day gain in four weeks, with roughly 95% of the stocks in the benchmark index closing higher. The Dow Jones Industrial Average climbed 1.4%, while the tech-heavy Nasdaq rose 2.1%. The Russell 2000 index was 2.2% higher as smaller company stocks outperformed the wider market.
The indexes are now all in green for the week. This is a welcome respite from recent market slumps that erased much the market’s gains in July and August rallies.
Wall Street watchers cautioned that the market is likely to see more volatility in coming weeks ahead of the next Federal Reserve interest rate policy update scheduled for Sept. 21. “It’s great that there’s an up-day, but I would caution anyone to not be too optimistic right now,” stated Randy Frederick, managing director trading & derivatives at Charles Swab. “You don’t have a whole lot of reason for that.”
Wall Street’s focus remains on the highest inflation in decades and the Fed’s attempt to rein it in with high interest rates. Markets expect the central bank to raise rates another four times this year. They are expected to do so again in two weeks.
The central bank has made it clear that it will continue raising rates until inflation levels off or cools. Fed officials predicted that the benchmark rate would be between 3.5% and 4.5% by June. 25% to 3.5% by year’s end and roughly a half-percentage point more in 2023.
“We will continue to fight for inflation,” Lael Brainard, Fed Vice Chair, stated at Wednesday’s banking industry conference. “Our resolve is firm, our goals are clear, and our tools are up to the task.”
Traders clawed back some of their recent losses with Wednesday’s rally, which pushed the S&P 500 up 71. 68 points to 3,979.87. The Dow rose 435. 98 points to 31,581. 28, and the Nasdaq gained 246. 99 points to 11,791.90. The Russell 2000 climbed 39. 68 points to 1,832.
Technology stocks and retailers made solid gains. Intuit rose 3.9%. Target gained 4.4% after it announced that it will no longer require its CEO to retire at the mandatory age of 65. This allows CEO Brian Cornell to continue his tenure for three years.
United Airlines saw a 5.5% increase in revenue after a busy summer travel season. Several competitors were able to take flight after the encouraging update. American Airlines rose 5.1%, while Delta Air Lines gained 3.3%.
Bond yields fell. The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, fell to 3. 27% from 3. 34% late Tuesday. The two-year Treasury yield, which tends towards predicting Fed action, fell to 3. 45% from 3.51%.
In energy trading, benchmark U.S. crude added 74 cents to $82. 68 a barrel. U.S. crude oil prices fell 5.7% Wednesday. Brent crude, the international standard, gained 68 cents to $88. 68 a barrel.
In currency trading, the U.S. dollar edged up to 143. 97 Japanese yen from 143. 74 yen. The euro was little changed at $1.00.
AP Business Writers Damian J. Troise and Alex Veiga and AP Economics Writer Christopher Rugaber contributed to this story.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
I have been writing professionally for over 20 years and have a deep understanding of the psychological and emotional elements that affect people. I’m an experienced ghostwriter and editor, as well as an award-winning author of five novels.