TOKYO – Asian stocks advanced on Thursday as Wall Street and global markets await a much-anticipated speech from the Federal Reserve Chair on interest rates later in the week.
Benchmarks rose in Japan, Australia, South Korea and China. Trading in Hong Kong has been temporarily delayed due to a storm.
Market watchers say stock prices are likely to remain volatile for some time, whether the focus is on controlling inflation or recession risks. A wait-and-see mood has settled in Asia over the past few sessions as markets await signs from the Fed.
“Market participants may want to see a more consistent recovery as a measure of policy success before confidence falters,” said Yeap Jun Rong, market strategist at IG Singapore.
Chinese stocks fell this week on recent interest rate cuts from the People’s Bank of China, which also announced measures to stimulate the economy.
The Bank of Korea raised interest rates by 0.25% to 2.5% in a bid to fight inflation, although there seemed to be signs of inflationary pressures gradually easing.
“Currently available information suggests that downside global economic risks have increased, impacted by the ongoing Ukraine crisis and significant policy rate hikes in key advanced economies, while inflation has remained elevated,” the bank said in a statement.
According to market analysts, a recent increase in fresh food prices remains a risk. The Bank of Korea said the country’s GDP, or gross domestic product — the sum of the value of a country’s products and services — is expected to grow 2.6% in 2022 and 2.1% in 2023.
South Korea’s economy has recovered quickly as consumption rebounded and restrictions to contain COVID-19 infections were eased, but growth is likely to weaken as exports fall amid a global slowdown, the central bank said.
Japan’s benchmark Nikkei 225 edged up 0.6% to 28,479.01. Australia’s S&P/ASX 200 was up 0.7% to 7,048.10. South Korea’s Kospi rose 1.0% to 2,471.68. Hong Kong’s Hang Seng rose 2.2% to 19,696.67 after trading was delayed earlier due to a storm. The Shanghai Composite rose 0.4% to 3,227.19.
On Wall Street, the S&P 500 rose 12.04 points, or 0.3%, to 4,140.77 as traders overall again held back on big moves. The Dow Jones Industrial Average was up 59.64, or 0.2%, to 32,969.23, and the Nasdaq Composite was up 50.23, or 0.4%, to 12,431.53.
It was the second consecutive day of modest moves for the market, but they follow some sharp fluctuations Up and down over the past few weeks.
Stocks rallied over the summer on hopes that inflation is peaking and the Federal Reserve may raise interest rates less aggressively than previously feared. But recent comments from Fed officials have dampened such expectations, sending Wall Street into its worst day in months on Monday. Meanwhile, discouraging economic news has highlighted the threat of a recession.
Wall Street’s focus remains on Friday when Fed Chair Jerome Powell addresses an annual economic conference in Jackson Hole, Wyoming. It has historically been the setting for market-moving speeches, with investors hoping Powell will provide clarity on further rate hikes. Will he be hawkish in what traders call a tendency to aggressively hike rates? Or dovish what Wall Street slang is for simpler terms?
Brian Jacobsen, senior investment strategist at Allspring Global Investments, doesn’t expect Powell to be clearly one or the other.
“I don’t think he wants to come across as hawkish or dovish, maybe he wants to come across as chicken,” Jacobsen said, listing the many variables that could change the Fed’s thinking ahead of its next rate policy meeting in September.
Jacobsen warned the speech could be a “nothingburger” with little to chew on, although the market might take that as a positive amid some expectations that Powell will sound hawkish.
Higher interest rates slow the economy in hopes of undercutting inflation. But they also risk stalling the economy if they get too aggressive, and they drag down the prices of all types of investments.
Treasury yields have risen recently, partly in anticipation that the Fed will continue to incline to hike rates aggressively to quell the worst inflation in decades. The two-year yield, which is trending in line with expectations for the Fed, rose to 3.40% from 3.30% late Tuesday.
The 10-year yield, which helps set rates on mortgages and many types of credit, rose to 3.11% from 3.05% after a report showed US durable goods orders were flat in July stayed. Excluding transport, however, growth was stronger than economists had expected.
In the stock market, Intuit rose 3.6% for one of the biggest gains in the S&P 500. The TurboTax owner delivered stronger-than-expected results for the most recent quarter and forecast earnings for the upcoming fiscal year that beat some analysts’ expectations. On the losing side were several retailers, who are among the latest companies to report how much profit they made in the spring.
In energy trading, the reference price for US crude rose 38 cents to $95.27 a barrel. Brent crude, the international standard, rose 61 cents to $101.83.
In forex trading, the US dollar fell from 137.09 yen to 136.78 Japanese yen. The euro was little changed at almost $1.00.
AP Business Writer Stan Choe contributed.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
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https://www.local10.com/business/2022/08/25/asian-stocks-gain-as-global-markets-await-fed-chair-speech/ Asian stocks gain as global markets await Fed Chair’s speech