Asian stocks rise mainly on interest rates and inflation hopes

TOKYO

Asian stocks were mostly higher on Wednesday after new data showed that inflation in the United States, although still at a 40-year high, was not as bad as some analysts said. had planned it.

Benchmarks rose in Japan, South Korea, Hong Kong and Australia. US futures were also higher, while oil prices were little changed.

Shares fell in Shanghai after the Chinese government announced that exports rose nearly 16% in March from a year earlier, while imports were flat.

Another encouraging factor was the easing of the COVID-19 lockdown in Shanghai. Shanghai has released 6,000 more people from central facilities where they were under medical observation to guard against the coronavirus, the government said on Wednesday, although the lockdown of most of China’s largest city remains in its third week. .

“The good news is that China will start to emerge from lockdowns at some point, and there will be an injection of stimulus of some form by the authorities to restart communities and the economy. The light at the end of the tunnel is reasonably bright for China,” Clifford Bennett, chief economist at ACY Securities, said in a comment.

But Bennett added: “Don’t expect a return to runaway growth, though.”

Japan’s benchmark Nikkei 225 jumped 1.9% to end at 26,843.49. Australia’s S&P/AS 200 gained 0.3% to 7,479.00. The South Korean Kospi jumped 1.9% to 2,716.60. Hong Kong’s Hang Seng gained 0.3% to 21,382.96, while the Shanghai Composite lost 0.6% to 3,194.92.

In Tokyo trading, shares of Shionogi fell 11% after the Japanese pharmaceutical company reported that animal testing for its experimental oral drug to treat COVID-19 showed it may pose a risk to the development of the fetus. Japanese media reported that the drug will not be prescribed to pregnant women or those who may be pregnant.

Stocks ended slightly lower on Wall Street on Tuesday after investors weighed inflation data for March, although overall they remained at their highest level in 40 years. Some analysts have called for caution.

““The fact remains that price pressures are still elevated at their highest level in 40 years and the short-term outlook for aggressive policy tightening to cool demand remains unchanged,” said Yeap Jun Rong, strategist market at IG in Singapore.

The S&P 500 fell 0.3% after rising 1.3% earlier in the day. The pullback extends the benchmark’s losing streak to a third day, reflecting investor concerns about potential collateral economic damage as the Federal Reserve more aggressively tackles high inflation.

The Dow Jones Industrial Average and the Nasdaq composite each fell 0.3% after losing early gains.

The indices initially rallied after the release of the report, which showed inflation last month was again at its highest level in generations, particularly due to soaring gasoline prices. Still, the reading was relatively close to economists’ expectations.

The measure known as “underlying inflation”, which excludes highly volatile food and fuel costs, moderated to its slowest monthly change since September.

In energy trading, benchmark U.S. crude added 10 cents to $100.70 a barrel. It climbed 6.7% to settle at $100.60 on Tuesday, keeping pressure on inflation. Brent crude, the international standard, rose 25 cents to $104.89.

Consumer prices rose 8.5% in March from a year earlier, accelerating from February’s inflation rate of 7.9% and the highest since 1981. To get it under control, the Fed revealed in the minutes of its last meeting that it was ready to raise short-term rates. half a percentage point, double the usual amount, in some upcoming meetings, something he hasn’t done since 2000.

The concern is that the Federal Reserve could be so aggressive in raising interest rates that it would force the economy into recession. Higher interest rates can discourage all kinds of investments.

Further swings could be expected for stocks as companies prepare to report earnings for the first three months of the year. Delta Air Lines, JPMorgan Chase and other major companies will kick off the reporting season on Wednesday.

In currency trading, the US dollar rose slightly to 126.03 Japanese yen from 125.37 yen. The euro traded at $1.0835, down from $1.0827.