BANGKOK (AP) — Stocks rose Friday in Asia after news of slowing U.S. consumer inflation last month pushed Wall Street benchmarks higher.
Tokyo’s Nikkei 225 index fell 1% to 26,174.88 on speculation that the Bank of Japan may cave in and tighten ultra-loose monetary policy as the yield on Japanese 10-year government bonds fell. been pushed past the central bank’s 0.5% cap on the sell-off ahead of next week’s policymaking meeting.
The BOJ kept its key rate at minus 0.1%, saying the downward pressure from a likely recession is a bigger risk than inflation, which remained at relatively subdued levels in Japan.
Shares of Fast Retailing, which jumped earlier in the week after news it would raise wages by up to 40%, fell 6.4% after the company reported weaker-than-expected earnings in the quarter previous.
China reported that its trade surplus hit a record $877.6 billion in 2022, as exports rose 7% despite weaker US and European demand and virus checks that temporarily shut down Shanghai and China. other industrial centers. The country’s politically sensitive trade surplus rose 29.7% from the 2021 record, already the highest of any economy.
Hong Kong’s Hang Seng rose 0.2% to 21,549.42 and the Shanghai Composite Index climbed 0.6% to 3,181.09. The Kospi in Seoul jumped 0.7% to 2,382.42, while Australia’s S&P/ASX 200 jumped 0.7% to 7,332.20.
Taiwan’s benchmark gained 0.7% while Bangkok’s SET rose 0.2%.
On Thursday, the S&P 500 rose 0.3% to 3,983.17. The Dow Jones Industrial Average gained 0.6% to 34,189.97. The Nasdaq advanced 0.6% to 11,001.10
Stocks of small companies outperformed the broader market. The Russell 2000 rose 1.7% to 1,876.06. Every major index is on track for weekly gains.
The report showing that inflation slowed in December rekindled hopes that the Federal Reserve could go further on the economy, using smaller interest rate hikes to cool prices. Such increases may stifle inflation, but they do so by slowing the economy and risking causing a recession. They also hurt investment prices.
Analysts warned investors not to get carried away. There is still pressure on the economy from high rates and more big swings may be yet to come.
Inflation has fallen for six consecutive months. Although it slowed to 6.5% last month from its peak of more than 9% in June, it remains high. The Fed has insisted that it plans to continue raising rates this year and does not expect any rate cuts until 2024 at the earliest.
Some sectors of the economy remain strong, threatening to keep pressure on inflation. Chief among them is the labor market. A report on Thursday showed fewer workers applied for unemployment benefits last week. It’s an indication that layoffs remain low even though some big tech companies have made high-profile announcements about job cuts.
A strong labor market is of course good for workers, especially when their raises have not kept up with inflation. But the Fed argues that wage gains could lead companies to raise prices to cover their higher costs and only worsen inflation, even as workers’ wage gains slowed in December.
Earnings reporting season is set to kick off in earnest on Friday, with JPMorgan Chase and UnitedHealth Group among the day’s headliners. A big concern on Wall Street is that high inflation and a slowing global economy are eating away at big business profits.
Analysts say this could be the first time earnings per share for S&P 500 companies have fallen from year-ago levels since 2020.
In other trading on Friday, the benchmark U.S. crude lost 18 cents to $78.21 a barrel in electronic trading on the New York Mercantile Exchange. It gained 98 cents to $78.39 a barrel on Thursday.
Brent crude, the pricing basis for international trade, fell 32 cents to $83.71 a barrel.
The dollar fell to 129.10 Japanese yen from 129.24 yen. The euro slipped to $1.0843 from $1.0849.
___
AP Business Writers Stan Choe and Damian J. Troise contributed.
Comments are closed.