Beijing, June 2: Asian stock markets followed Wall Street higher on Friday ahead of a US jobs update after Federal Reserve officials reignited hopes another interest rate hike might be postponed.
Shanghai, Tokyo, Hong Kong and Seoul advanced after US lawmakers approved a deal to avert a government debt default. Oil prices strengthened.
Wall Street’s benchmark S and P 500 index rallied 1 per cent on Thursday after data showed manufacturing and retail activity weakening.
That added to hopes the Fed might decide upward pressure on prices is easing and more rate hikes can be postponed or scaled down.
“Skipping a rate hike” at this month’s Fed meeting would let policymakers “see more data before making decisions,” said a board member, Philip Jefferson.
The president of the Federal Reserve Bank of Philadelphia, Patrick Harker, made similar comments.
The statements “reignited the prospect of skipping a hike” after strong jobs data last week fed fears of more increases, said James Knightley of ING in a report.
However, Knightley said, if a monthly US government report due on Friday shows the job market still is strong, that “could easily swing things back in favour of a hike.”
Late Thursday, the Senate gave final approval to an agreement to raise the amount the government can borrow in exchange for spending cuts.
The widely expected step removed the threat of default that roiled markets last week before President Joe Biden and House Speaker Kevin McCarthy negotiated a compromise.
The Shanghai Composite Index gained 0.8 per cent to 3,229.06 and the Nikkei 225 in Tokyo added 1 per cent to 31,445.15. The Hang Seng in Hong Kong surged 3.7 per cent to 18,883.22.
The Kospi in Seoul rose 1.1per cent to 2,595.55 and the S and P ASX 200 in Sydney was less than 0.1 per cent higher at 7,130.20.
India’s Sensex opened up less than 0.1per cent at 62,434.48. New Zealand declined while Bangkok advanced. Markets in Singapore and Indonesia were closed for holidays.
On Wall Street, the S and P 500 rose to 4,221.02. The Dow Jones Industrial Average gained 0.5 per cent to 33,061.57 and the Nasdaq composite jumped 1.3 per cent to 13,100.98.
While the agreement on avoiding a US debt default was positive for the market, investors are more concerned about whether the economy will fall into a recession before inflation recedes enough to convince the Fed to ease of rate hikes.
A report on Thursday showed fewer workers applied for unemployment benefits last week than expected, while another suggested employers increased their payrolls last month by more than forecast.
That’s good news for workers and the overall economy, but the Fed worries a strong job market could also keep pressure up on inflation.
A report from the Institute for Supply Management said manufacturing shrank for a seventh month in May. The contraction was worse than both the prior month and what economists expected.
Following those reports, traders were largely betting on the Fed to hold rates steady, though Jefferson also said that wouldn’t necessarily mean the end to hikes.
Apple, Microsoft and Amazon all rose at least 1.3 per cent.
Their movements carry extra weight on the S and P 500 because they are some of the most valuable on Wall Street.
Dollar General dropped 19.5 per cent after the retailer reported weaker profit and revenue for the latest quarter than analysts expected. It serves lower income households.
Macy’s, which also owns Bloomingdale’s stores, rose 1.2 per cent after reporting better-than-expected profit but weaker revenue than forecast.
It also slashed expectations for the year and said shoppers began to pull back starting in March.
Some of the enthusiasm surrounding Wall Street’s recent frenzy around artificial intelligence also cooled.
C3.Ai gave a forecast for revenue this upcoming fiscal year that failed to wow Wall Street like Nvidia’s did last week. C3.Ai tumbled 13.2 per cent, though it’s still up 210per cent so far this year. Nvidia rose 5.1per cent.
In the energy market, benchmark US crude rose 35 cents to USD 70.45 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose USD 2.01 on Thursday to USD 70.10. Brent crude, the price basis for international oil trading, advanced 39 cents to USD 74.67 per barrel in London. It gained USD1.68 the previous session to USD 74.28.
The dollar gained to 138.94 yen from Thursday’s 138.86 yen. The euro edged up to USD 1.0764 from USD 1.0762. (AP)
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