Asian stocks are higher after slight gains on Wall Street

BANGKOK (AP) — Stocks rose in Asia on Tuesday after Wall Street benchmarks reversed some losses from their worst week since early December.

Stocks are under selling pressure as analysts have raised their forecasts for how high the Federal Reserve will raise interest rates and how long it will keep them there to curb inflation that has not fallen as much as expected given strong job growth and other signs of resilience in the economy.

Economies around the world have remained more resilient than feared as China loosens up are business-damaging anti-COVID restrictions and Europe avoiding a worst-case scenario energy crisis.

“As we move into Turnaround Tuesday, investors are debating whether inflation reflation in January was just a temporary bump in the road as the economy adjusts to a post-pandemic world,” Stephen Innes of SPI Asset Management said in a report. “The post-pandemic era continues to produce unusual macroeconomic patterns.”

The Nikkei 225 index in Tokyo rose 0.2% to 27,487.85 and the Kospi in Seoul rose 0.9% to 2,424.89.

In Hong Kong, the Hang Seng gained 0.4% to 20,030.25 while the Shanghai Composite index rose 0.1% to 3,260.40. The Australian S&P/ASX 200 rose 0.5% to 7,261.20.

Equities struggled in February after a strong start to the year. Robust economic data helps calm recession fears may be imminent given the dampening impact of more expensive borrowing on consumer and business spending.

But they likely mean a longer period of higher interest rates. Higher interest rate expectations were most evident in the bond market, where yields have shot up in recent weeks.

Previously, analysts thought the Fed would ease soon. Now it is expected that it could raise rates above 5.25%. The Fed’s key overnight interest rate is now in a range of 4.50% to 4.75%, up from near zero at the start of last year.

On Monday, the S&P 500 rose 0.3% to 3,982.24, just its second gain in seven days. The Dow Jones Industrial Average gained 0.2% to 32,889.09, while the Nasdaq index rose 0.6% to 11,466.98.

Stocks of Union Pacific rose 10.1% for one of the biggest gains in the market after the rail company announced plans to replace its CEO later this year. The company is under pressure from a hedge fund with a large ownership stake in it.

The 10-year Treasury yield fell to 3.92% from 3.95% late Friday. That yield helps determine rates for mortgages and other major loans. The two-year interest rate, which moves more based on the Fed’s expectations, fell from 4.81% to 4.79%. It’s near the highest level since 2007.

Revenues fell after a report found orders for machinery, aircraft and other durable products fell more than economists had expected in January.

Even Monday’s weaker-than-expected durable goods report had some underlying strength. After ignoring transportation-related equipment, orders surged last month to their biggest gain since March, far more than the decline economists had expected.

Even with concerns that interest rates will come in higher than expected, the S&P 500 is still holding on to a 3.7% gain for the year so far, and shoppers continue to splurge in stores. Both can exert upward pressure on inflation.

Most companies have already reported their results for the last three months of 2022. Among the several dozen companies in the S&P 500 yet to report this week are Advance Auto Parts, Kroger and Target.

Overall, this season for earnings reporting has been lackluster. Companies in the S&P 500 are on track to report their first year-over-year decline in earnings per share since the summer of 2020, according to FactSet.

On another trading Tuesday, US benchmark crude gained 24 cents to $75.91 a barrel in electronic trading on the New York Mercantile Exchange. It lost 64 cents to $75.68 on Monday.

Brent crude, the price base for international trade, rose 17 cents to $82.21 a barrel.

The US dollar rose from 136.20 yen to 136.29 Japanese yen. The euro fell from $1.0609 to $1.0593.


AP Business Writer Stan Choe contributed.





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