Asian shares rise on optimism about US, China economies

Tokyo, Aug. 17 (BNA): Asian stocks rose significantly on Wednesday as regional markets eye strong economic indicators from the United States and China as growth drivers.

Benchmarks rose in morning trading in Japan, China and Australia, although shares fell slightly in South Korea. Analysts have warned that significant risks remain, such as a spike in COVID-19 cases in some Asian countries, concerns about global inflation and China’s policies to curb infections.

Economic growth forecasts in China and the US are likely to remain key to gauging recession fears. Anderson Alves of ActivTrades, according to the Associated Press (AP), said China’s “zero COVID” policy remains an important headwind to global growth.

Japan’s Nikkei 225 index rose 0.8% in morning trading to 29101.33. Australia’s S&P/ASX 200 rose about 0.1% to 7,109.50. South Korea’s Kospi lost 0.5 percent to 2,521.84 points. Hong Kong’s Hang Seng rose 0.5% to 19932.34, while the Shanghai Composite rose 0.2% to 3,284.14.

In New Zealand, the central bank raised the benchmark interest rate from 2.5% to 3% as it continues to try to fight inflation. The Reserve Bank of New Zealand said domestic spending remained resilient in the face of domestic and global headwinds, and employment was solid. The bank said lower oil prices have given some relief from inflation, but it needs to continue to tighten monetary conditions until inflation returns to the target range of 1% to 3%.

New Zealand’s inflation rate is 7.3% and unemployment is 3.3%.

In Japan, new cases of COVID-19 have risen in recent weeks, as restrictions on economic activities ease. Ambulances had to circulate for hours in search of hospitals that could receive patients. But domestic travel and shopping seem to have returned, driving up consumption.

Wall Street ended a choppy day of trading with a mostly higher close, adding to the recent streak of market gains.

The S&P 500 rose 0.2%, its third straight gain, adding 8.06 points to 4,305.20. The Dow Jones rose 239.57 points, or 0.7%, to 34,152.01. The Nasdaq index fell 25.50 points, or 0.2 percent, to 13,102.55 points.

Shares of smaller companies fell. The Russell 2000 Index fell 0.82 points, or less than 0.1%, to 2020.53. Bond yields rose. The yield on the 10-year Treasury rose to 2.81% from 2.79% late Monday.

The recent volatility in the market came as traders cautiously reviewed the encouraging financial results from major retail traders.

Walmart stock jumped 5.1% after the country’s largest retailer reported strong results that easily beat analysts’ expectations. Home Depot stock rose 4.1% after reporting better-than-expected results.

Technology, healthcare, and energy stocks fell, limiting the broader market’s advance. Broadcom stock fell 1.3%, Moderna shed 5% in the S&P 500’s biggest drop, and Marathon Oil tumbled 1.1%. Retailers, consumer product makers and banks posted solid gains.

US stocks had their best month in a year and a half in July, and the streak of gains continued into August, in part on hopes that inflation would ease. The latest government report on consumer prices showed that inflation essentially stopped from June to July.

The latest results from retailers show spending remains strong, even as US consumers face the highest inflation in 40 years. Wall Street was concerned that rising prices on everything from food to clothing might eventually hamper the main driver of economic growth, consumer spending.

Investors will get more updates on the retail sector on Wednesday, when Target reports its results and the US Commerce Department releases its retail sales report for July. Economists polled by FactSet expect modest growth of 0.2% from June, when sales rose 1%.

The retail reports culminate in the latest round of corporate earnings, which have been closely watched by investors trying to determine the impact of inflation on businesses and consumers, while trying to gauge the reaction of the US Federal Reserve.

The central bank raises interest rates in an effort to slow economic growth and rein in inflation, though it risks hitting the brakes hard and turning the economy into a recession.

The Federal Reserve in July raised its benchmark interest rate by three-quarters of a point for the second time in a row. On Wednesday, Wall Street will get more details about the process behind that decision when the Fed releases minutes of the meeting. Investors expect a half-point increase at the Federal Reserve’s next meeting in August, according to CME’s FedWatch tool.

In energy trading, US crude rose 43 cents to $86.96 a barrel. US crude oil prices fell 3.2% on Tuesday. Brent crude, the international benchmark, rose 31 cents to $92.65 a barrel.

In currency trading, the US dollar fell to 134.08 Japanese yen from 134.22 yen. The euro was quoted at $1.0170, almost unchanged from $1.0171.

HF