Asian shares rise on Fed hopes despite China concerns

Asian shares rise on Fed hopes despite China concerns

TOKYO (AP) — Asian stocks gained on Thursday, although optimism about the Federal Reserve holding back on aggressive interest rate hikes was offset by some uncertainty over coronavirus restrictions in China.

Trading was relatively muted in Asia before US markets closed for Thanksgiving. Benchmarks rose in Japan, Australia and South Korea. They rose in Hong Kong but fell in Shanghai. Oil prices fell.

“A headwind for Asian markets is the COVID situation in China, where investors appear to be avoiding local assets and commodities as the country is seeing a near-record number of COVID cases. Broad restrictions will continue to weigh on risk sentiment and macroeconomic fundamentals, weighing on the outlook for cyclical stocks and commodities,” ActivTrades’ Anderson Alves said in a comment.

Japan’s benchmark Nikkei 225 rose 1.0% to end at 28,383.09. Australia’s S&P/ASX 200 rose 0.1% to 7,241.80. South Korea’s Kospi gained almost 1.0% to 2,441.33. Hong Kong’s Hang Seng rose 0.6% to 17,626.00, while the Shanghai Composite fell 0.3% to 3,089.31.

Stocks closed broadly higher on Wall Street after minutes from the Federal Reserve’s most recent policy meeting showed central bank officials agreed that smaller rate hikes would likely be appropriate “soon.”

That suggests policymakers are seeing signs that inflation may be cooling as the economy slows with more expensive borrowing.

The S&P 500 rose 0.6% to 4,027.26, while the Dow Jones Industrial Average rose 0.3% to 34,194.06. The Nasdaq composite closed 1% higher at 11,285.32.

The Russell 2000 index of smaller companies rose, adding 0.2% to close at 1,863.52.

Long-term Treasury yields fell. The 10-year Treasury yield, which influences mortgage rates, fell from 3.76% to 3.69%.

At their Nov. 1-2 meeting, Fed officials expressed uncertainty about how long it might take for their rate hikes to slow the economy enough to tame inflation. In a subsequent press conference, Chairman Jerome Powell stressed that the Fed was not even close to declaring victory in its fight to curb high inflation. Other Fed officials in the weeks since the meeting have indicated that additional hikes are still needed.

The central bank’s benchmark rate is currently between 3.75% and 4%, up from near zero in March. He has warned that he may ultimately have to raise rates to previously unexpected levels to cool the highest inflation in decades.

Wall Street has been watching the latest economic and inflation data closely for any signs that could allow the Fed to ease up on future rate hikes. Investors are worried that the Fed could slow economic growth too hard and trigger a recession.

Consumer spending and the labor market have so far remained strong points in the economy. That has helped as a bulwark against a recession, but it also means the Fed may need to stay aggressive.

Technology stocks and some big retailers helped drive much of the benchmark S&P 500’s gains on Wednesday. Chipmaker Nvidia rose 3% and Target rose 3.5%.

Homebuilders rose broadly after a government report showed U.S. new home sales rose more than expected in October. Lennar gained 1.6% and DR Horton gained 2.2%.

In energy trading, U.S. benchmark crude lost 47 cents to $77.47 a barrel. Brent crude, the international standard, fell 66 cents to $84.75 a barrel.

In currency trading, the US dollar fell to 138.87 Japanese yen from 139.57 yen. The euro was at $1.0435, up from $1.0399.


Yuri Kageyama is on Twitter

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