Asia shares rise on US rally ahead of expected Fed rate hike

Tokyo, Sept. 20 (BNA): Most Asian stocks rose on Tuesday, after Wall Street closed higher amid a belated buying spree after recent losses as investors await another rate hike by the US Federal Reserve.

Markets were nervous about whether the Fed’s plan to cool the heaviest US inflation in four decades might be too aggressive and throw the economy into recession by putting the brakes on growth hard.

Japan reported that consumer inflation jumped in August to 3.0%, the highest level since November 1991 but well below 8% plus core inflation readings in the US excluding volatile fresh food prices which rose 2.8%. The Bank of Japan is scheduled to hold a two-day monetary policy meeting later this week, although analysts expect the central bank to stick to its easy monetary policy, the Associated Press reported.

“The expectation is that easy monetary policies will remain at the next meeting this week. Bank of Japan Governor Haruhiko Kuroda previously stated that he wants to see a ‘stable and sustainable rise’ in both wages and prices before considering any policy shift,” said Yeap Jun Rong, strategist. The market at IG in Singapore, in a report.

Japan’s benchmark Nikkei 225 index rose 0.4% in morning trading to 27,672.59. Australia’s S&P/ASX 200 climbed 1.2% to 6797.30. South Korea’s Kospi rose 0.5 percent to 2,368.09. In China, where the base loan rate was kept unchanged, the Shanghai Composite Index added 0.5% to 3,130.86. Hong Kong’s Hang Seng rose 1.3% to 18,810.35.

Wall Street’s indexes oscillated on Monday between modest gains and losses for most of the day ahead of a buying spree in the final hour of trading. The S&P 500 rose 0.7%, up from a 0.9% decline. It closed at 3899.89.

The Dow Jones Industrial Average rose 0.6% to 31,019.68 and the Nasdaq Composite rose 0.8% to 11,535.02.

Technology stocks, retailers, banks and industrial companies helped lift the market. Apple shares rose 2.5%, Home Depot 1.6%, Bank of America 1.7% and United Airlines closed 3.3% higher.

Health care and real estate stocks fell, paring gains elsewhere in the market. Pfizer shares fell 1.3 percent and Aabar Tower 2.2 percent.

The yield on the two-year Treasury, which tends to follow expectations for the Fed’s action, rose to 3.94% from 3.87% late Friday. The 10-year yield, which affects mortgage rates, rose to 3.49% from 3.45%.

Small-cap stocks also rose. The Russell 2000 index closed 0.8% higher.

Volumes were lower than usual, said Scott Ladner, chief investment officer at Horizon Investments, a sign that most traders were wary of making big changes ahead of the Fed’s policy announcement on Wednesday afternoon.

“No one really wants to stand up to it,” he said. “It has been such a slippery market on both the upside and downside.”

The US market is emerging from its worst week in three months after a surprisingly hot report on inflation and major companies, including FedEx, warning of deteriorating trends in the economy.

Investors will get another update on the housing sector on Wednesday when the National Association of Realtors releases August figures for sales of previously occupied homes.

Average long-term mortgage rates in the US rose more than 6% last week for the first time since the housing crash in 2008. The higher rates could make an already tight housing market more expensive for American homebuyers.

In energy trading, benchmark US crude rose 5 cents to $85.41 a barrel in electronic trading on the New York Mercantile Exchange. It rose 60 cents to $85.36 a barrel on Monday.

Brent crude, the international benchmark, rose 13 cents to $92.13 a barrel.

In currency trading, the US dollar fell to 143.20 yen from 143.22 yen. The euro rose to $1.0030 from $1.0024.

HF