Asian shares gain as investors shrug off downbeat data

Bangkok, June 24 (BNA): Shares in Asia rose on Friday, despite data indicating slowing economies. Tracking the advance gains on Wall Street, as the market heads for its first weekly gain after three weeks of punishing losses.

The Nikkei 225 in Tokyo rose 1.2% to 26491.97 and the Kospi in Seoul jumped 2.4% to 2,369.16. Hong Kong’s Hang Seng advanced 2% to 21,707.92 and the Shanghai Composite rose 1% to 3,354.63.

In Australia, the S&P/ASX 200 rose 0.8% to 6577.40. The Associated Press (AP) reported that shares also rose in India and Taiwan.

US and European futures also rose.

Market players are looking forward to US inflation data due next week. They seem to have ignored preliminary data showing slowing factory activity in several countries including Japan.

IG’s Jun Rong Yeap said in a comment that surveys of manufacturing managers for “many advanced economies came in lower than expected in both the manufacturing and service sectors, indicating a broad-based moderation in economic activities.”

A report released on Friday showed that inflation in Japan remained at 2.1% in May, driven by energy costs and a weak currency. However, core core inflation, which strips out the volatile costs of energy and fresh food, remained at 0.8% and the central bank is unlikely to follow the lead of the US Federal Reserve and other central banks in raising interest rates, analysts said.

Marcel Thilliant of Capital Economics said in a report that the BOJ “is not convinced that this will be sustainable because wage growth remains subdued and higher energy costs affect corporate earnings and consumer sentiment.”

On Wall Street, trading was choppy as investors focused on another round of testimony before Congress by Federal Reserve Chairman Jerome Powell. He told a House committee that the Fed hopes to curb the worst inflation in four decades without pushing the economy into recession, but acknowledged that “that path is becoming more and more difficult.”

The S&P 500 finished 1% higher at 3,795.73 after falling 0.4%. The Dow Jones Industrial Average rose 0.6% to 30677.36 and the Nasdaq rose 1.6% to 11,232.19.

Small-cap stocks also rose. The Russell 2000 Index rose 1.3% to 1711.67.

Trading has been turbulent in recent weeks as investors try to determine if a recession is looming. The S&P 500 is currently in a bear market. That means it’s down more than 20% from its recent high, which was in January. The index has fallen for 10 weeks out of the last 11 weeks.

“I don’t think a recession is inevitable,” Powell emphasized Thursday. He has said that this is a “potential possibility” and that the central bank faces a more difficult task amid the war in Ukraine, which is essentially driving up oil and other commodity prices and making inflation more prevalent.

Powell spoke to Congress a week after the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point, its biggest hike in nearly three decades. Federal Reserve policy makers also expected a faster rate of rate hikes this year and next than they forecast three months ago, with its key rate reaching 3.8% by the end of 2023. This will be a 15-year high.

The Labor Department reported Thursday that fewer Americans filed for unemployment benefits last week, although it was slightly more than economists had expected. A strong labor market is a relatively bright spot in an otherwise weak economy, with consumer confidence and retail sales showing increasing damage from inflation.

As higher prices add to the severity of pocketbooks, consumers shift spending from expensive items like electronics to necessities. The pressure was exacerbated by the rise in record gasoline prices, which show no signs of abating.

The big tech and healthcare companies have done a lot of the heavy lifting. Microsoft shares rose 2.3 percent and Johnson & Johnson 2.2 percent.

Energy stocks fell as the price of US crude oil fell 1.8%. Valero shares fell 7.6 percent.

Early Friday, the price of benchmark US crude oil rose 36 cents to $104.63 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for pricing international trade, slipped 9 cents to $106.55 a barrel.

Bond yields fell dramatically. The yield on the 10-year Treasury, which helps determine mortgage rates, fell to 3.09% from 3.15% late Wednesday.

The US dollar fell to 134.73 Japanese yen from 134.94 yen. The euro rose to $1.0539 from $1.0524.

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