Asia follows Wall Street in hopes the Fed will ease rate hikes

BEIJING (AP) — Asian stock markets followed Wall Street higher on Friday ahead of a U.S. jobs update after Federal Reserve officials revived hopes another rate hike interest may be deferred.

Shanghai, Tokyo, Hong Kong and Seoul advanced after U.S. lawmakers approved a deal to avoid a government debt default. Oil prices firmed up.

Wall Street’s benchmark S&P 500 index rose 1% on Thursday after data showed weakening manufacturing and retail activity. This added to hopes that the Fed may decide that upward pressure on prices is easing and that further rate hikes may be postponed or reduced.

“Skipping a rate hike” at this month’s Fed meeting would allow policymakers “to see more data before making decisions,” said board member Philip Jefferson. Federal Reserve Bank of Philadelphia President Patrick Harker made similar comments.

The statements “rekindled the prospect of jumping a rise” after strong jobs data last week stoked fears of further increases, ING’s James Knightley said in a report.

However, Knightley said, if a monthly U.S. government report due on Friday shows the labor market is still strong, that “could easily tip things in favor of an upside.”

Late Thursday, the Senate gave final approval to a deal to increase the amount the government can borrow in exchange for spending cuts.

The widely anticipated step eliminated the threat of default that rocked markets last week before President Joe Biden and House Speaker Kevin McCarthy brokered a compromise.

The Shanghai Composite Index gained 0.8% to 3,229.06 and the Nikkei 225 in Tokyo added 1% to 31,445.15. The Hang Seng in Hong Kong jumped 3.7% to 18,883.22.

The Kospi in Seoul rose 1.1% to 2,595.55 and the S&P ASX 200 in Sydney rose less than 0.1% to 7,130.20.

The Indian Sensex opened less than 0.1% at 62,434.48. New Zealand declined while Bangkok rose. Markets in Singapore and Indonesia were closed for the holidays.

On Wall Street, the S&P 500 rose to 4,221.02. The Dow Jones Industrial Average gained 0.5% to 33,061.57 and the Nasdaq composite jumped 1.3% to 13,100.98.

While the deal to avert a US debt default was positive for the market, investors are more concerned about whether the economy will fall into recession before inflation recedes enough to convince the Fed to dodge. easing rate hikes.

A report on Thursday showed fewer workers applied for unemployment benefits last week than expected, while another suggested employers raised payrolls last month more than expected.

This is good news for workers and the economy in general, but the Fed is concerned that a strong labor market will keep pressure on inflation.

A report from the Institute for Supply Management indicates that manufacturing fell for a seventh month in May. The contraction was worse than the previous month and than economists expected.

Following the reports, traders were heavily betting on the Fed to keep rates steady, though Jefferson also said that wouldn’t necessarily mean an end to the hikes.

Apple, Microsoft and Amazon all rose at least 1.3%. Their moves carry extra weight on the S&P 500 as they are among the most valuable on Wall Street.

Dollar General fell 19.5% after the retailer reported weaker earnings and revenue for the last quarter than analysts expected. It serves low-income households.

Macy’s, which also owns Bloomingdale’s stores, rose 1.2% after reporting better-than-expected profit but weaker-than-expected revenue. He also lowered expectations for the year and said buyers started pulling back from March.

Some of the enthusiasm surrounding Wall Street’s recent frenzy over artificial intelligence has also cooled. gave a revenue forecast for the coming fiscal year that failed to wow Wall Street the way Nvidia did last week. fell 13.2%, although it is still up 210% so far this year. Nvidia rose 5.1%.

In the energy market, benchmark U.S. crude rose 35 cents to $70.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.01 on Thursday to $70.10. Brent crude, the price basis for international oil trade, advanced 39 cents to $74.67 a barrel in London. It gained $1.68 the previous session at $74.28.

The dollar gained 138.94 yen from 138.86 yen on Thursday. The Euro rose slightly to $1.0764 from $1.0762.

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