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Asian stocks rise on optimism over economic data and earnings

Asian stocks rise on optimism over economic data and earnings

 


Asian shares in TOKYO mostly rose on Thursday as investors welcomed encouraging economic data and quarterly earnings reports from major corporations.

Benchmarks rose across the region, notably in Japan, China, Australia and South Korea. The gains followed a strong rally on Wall Street.

The jitters eased as U.S. House Speaker Nancy Pelosi visited Taiwan after leaving for South Korea and later Japan, strong U.S. allies for years. decades. But analysts said some geopolitical risks remained, with China conducting military exercises near the self-governing island it claims as its own territory.

“Despite the easing of immediate concerns, investors will be alert to any potential escalation in US-China tensions, as any economic sanctions from China are likely to negatively affect risk sentiment and positioning in Asian markets,” said Anderson Alves of ActivTrades.

Alves said investors are also watching U.S. nonfarm payrolls, due Friday, for guidance on hiring and how that might affect interest rate policy. But overall, Pelosi’s journey so far has had little impact on the markets.

Japan’s benchmark Nikkei 225 added 0.5% in morning trade to 27,892.68. Australia’s S&P/ASX 200 gained 0.2% to 6,990.30. South Korea’s Kospi added 0.4% to 2,471.26. Hong Kong’s Hang Seng rose 1.7% to 20,105.06, while the Shanghai Composite edged up 0.4% to 3,175.17.

On Wall Street, the S&P 500 rose to 4,155.17, a nearly 2-month high. The Nasdaq gained 2.6% to 12,668.16. Both indices more than recouped their losses earlier in the week. The Dow Jones Industrial Average rose 1.3% to 32,812.50. The Russell 2000 Small Business Index ended up 1.4% at 1,908.93.

Tech companies, retailers and communications companies were among the biggest winners. Only shares in the energy sector fell, dragged down by lower oil prices.

Investors applauded a report on the services sector, which makes up the bulk of the US economy. The sector grew faster than expected in July, according to the Institute for Supply Management. A separate report showed US orders for big-ticket durable goods rose more than expected in June.

Some recent weak data on the economy has bolstered speculation that the peak of inflation and aggressive rate hikes from the Federal Reserve may be approaching or may have already passed. The weak data, however, also shows the risk of a recession as the Fed puts the brakes on the economy.

That’s why Wednesday’s more positive economic reports helped put traders in a buying mood.

“It just provides people with more evidence that this economy is hanging in there,” said Jeff Buchbinder, equity strategist for LPL Financial. “At this point, we have a combination of evidence that inflation is down.”

The 10-year Treasury yield fell to 2.71% from 2.73% on Tuesday evening.

Earnings remain the focus this week as investors analyze the latest earnings results and corporate statements to better understand how inflation is affecting businesses and consumers.

Drugstore chain CVS rose 6.3% after posting strong financial results and raising its profit forecast for the year. Starbucks rose 4.3% after also posting strong financial results. Nearly three-quarters of companies in the benchmark S&P 500 reported earnings for the last quarter and results mostly beat analysts’ forecasts.

Several companies, however, slipped amid disappointing results. Taco Bell owner Yum Brands fell 1.9% following a weak earnings report and online dating services company Match Group fell 17.6% after giving investors weak financial forecasts.

PayPal jumped 9.2% following a report that activist investor Elliott Management took a large stake in the payments company.

Robinhood Markets, whose stock trading app has helped attract a new generation of investors to the market, rose 11.7% after it announced it was cutting nearly a quarter of its workforce. Falling cryptocurrency prices and a turbulent stock market have kept more customers from its app.

Oil prices rose following OPEC’s decision to increase production in September at a much slower pace than in previous months. Benchmark U.S. crude added 34 cents to $91.00 a barrel. On Wednesday, U.S. crude oil fell 4% to settle at $90.66 a barrel. Brent crude, the international standard, added 21 cents to $96.99 a barrel.

Markets are also watching for potential economic fallout from China following US House Speaker Nancy Pelosi’s visit to Taiwan. China claims self-governing Taiwan as part of its territory and has banned imports of Taiwanese citrus fruits and frozen fish in retaliation for Pelosi’s visit. But he avoided disrupting the flow of computer chips and other industrial goods, a step that could shake up the global economy.

Upcoming labor market data could help investors determine how the Federal Reserve will continue with its aggressive interest rate policy in an attempt to keep inflation under control. US unemployment claims figures for the past week will be released on Thursday, and the government will release its July jobs report on Friday.

In currency trading, the US dollar fell slightly to 133.73 Japanese yen from 133.83 yen. The euro traded at $1.0167, little changed from $1.0172.

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AP Business Writers Damian J. Troise and Alex Veiga contributed.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

Sources

1/ https://Google.com/

2/ https://www.startribune.com/us-stocks-rise-following-solid-earnings-reports/600195242/

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