Asian stocks mostly higher as markets await Fed chair speech

Tokyo, Aug. 25 (BNA) Most Asian stocks rose on Thursday, as Wall Street and global markets waited for an expected speech from the US Federal Reserve on interest rates at the end of the week.

Standards have risen in Japan, Australia, and South Korea. Trading in Hong Kong was delayed by a storm, while Shanghai shares rose slightly but were virtually unchanged in morning trading.

Market watchers say stock prices are likely to fluctuate for some time, regardless of whether the focus is on controlling inflation or recession risks. In Asia, a wait-and-see mood has prevailed during recent sessions, as markets await cues from the Federal Reserve.

Chinese stocks tumbled this week, amid recent interest rate cuts from the People’s Bank of China, which has also announced policies to try to stimulate the economy, according to the Associated Press (AP).

“Market participants may want to see a more consistent recovery as a measure of policy success before confidence lifts,” said Yeap Jun Rong, market strategist at IG in Singapore.

Japan’s Nikkei 225 index rose 0.5% in morning trading to 28,460.60. Australia’s S&P/ASX 200 rose 0.8% to 7,052.40. South Korea’s Kospi rose 0.8% to 2467.09. The Shanghai Composite was little changed at 3215.77. Trading in Hong Kong was delayed due to a storm.

On Wall Street, the S&P 500 rose 12.04 points, or 0.3%, to 4,140.77, as traders generally stopped making big moves. The Dow Jones Industrial Average added 59.64, or 0.2%, to 32969.23, and the Nasdaq Composite added 50.23, or 0.4%, to 12431.53.

This was the second consecutive day of modest market moves, but it does follow some extreme up and down swings over the previous weeks.

Stocks led higher over the summer on hopes that inflation is nearing its peak and that the Federal Reserve may raise interest rates less sharply than previously feared. However, recent comments by Federal Reserve officials dampened such expectations, sending Wall Street on Monday to its worst day in months. Meanwhile, disappointing reports on the economy have highlighted the risks of a recession.

The focus of Wall Street remains focused on Friday, when Federal Reserve Chairman Jerome Powell addresses an annual economic conference in Jackson Hole, Wyoming. This has been the setting for market action speeches in the past, which is why investors hope Powell will provide more clarity on a rate hike. Will it be hawkish, which is what traders call the bias towards aggressive rate hikes? Or doves, what is Wall Street’s talk of easier circumstances?

Brian Jacobsen, chief investment analyst at Allspring Global Investments, doesn’t expect Powell to be clear or that.

“I don’t think he wants to appear as hawkish or pessimistic, maybe he wants to appear as a chicken,” Jacobsen said, noting the many variables that could change the Fed’s thinking ahead of its next rate policy meeting in September.

Jacobsen cautioned that the speech could be a “nothing burger” with little to chew on, although the market could take that as positive given some expectations that Powell will appear hawkish.

High interest rates slow the economy in the hope of reducing inflation. But they also risk strangling the economy if they are aggressively made, and drive down the prices of all kinds of investments.

Treasury yields have risen recently, in part in anticipation of the Fed’s continuing tendency to aggressively raise interest rates to crush the worst inflation in decades. The two-year yield, which tends to follow the Fed’s expectations, rose to 3.40% from 3.30% late Tuesday.

The 10-year yield, which helps determine mortgage rates and many types of loans, rose to 3.11% from 3.05% after a report showed that US orders for long-term goods were flat in July. However, excluding transportation, growth was stronger than economists had expected.

In the stock market, Intuit surged 3.6% for one of the biggest gains in the S&P 500. The owner of TurboTax delivered stronger-than-expected results for the last quarter and forecast revenue for the upcoming fiscal year that beat some analysts’ expectations.

On the losing end were several retailers, who were among the last to report how much profit they made during the spring.

Nordstrom fell 20% after it cut its financial forecast for the year, although it posted stronger-than-expected fourth-quarter earnings. It’s the latest major retailer to say it’s struggling to keep up with the changing shopping patterns of its customers.

Shoppers are shifting their spending away from stores and toward travel and other experiences. Those who still come through the doors are seeing their purchasing power dwindle due to high inflation, with low-income clients especially pressured. This leaves the industry facing mountains of unsold inventory.

Advance Auto Parts stock fell 9.6% after its quarterly results came in less than expected. The auto parts chain said its do-it-yourself customers are under pressure from high inflation and much higher gasoline prices than they were a year ago.

In energy trading, US crude rose 72 cents to $95.61 a barrel. Brent crude, the international benchmark, added 77 cents to $101.99.

In currency trading, the US dollar fell to 136.74 Japanese yen from 137.09 yen. The euro didn’t change much at 99 cents.

HF