TOKYO (AP) — Asian stocks rose on Wednesday, following a rally on Wall Street led by technology companies, although investors remained concerned about the war in Ukraine and inflation.
Benchmarks were higher across the Asian region, despite concerns over rising energy costs. Oil prices rose, while the dollar appreciated against the Japanese yen.
Investors were also keeping a close eye on what might happen with President Joe Biden attending a NATO meeting and Thursday’s EU summit in Europe, where sanctions and the Russian oil embargo will likely top the list. the agenda.
Ukrainian President Volodymyr Zelenskyy was due to deliver a highly anticipated online speech to the Japanese parliament. Japan, which abided by a pacifist constitution after its defeat in World War II, has taken an unusually vocal stance on the war in Ukraine, joining sanctions against Russia alongside Western nations.
Japan’s benchmark Nikkei 225 jumped 2.7% in morning trade to 27,947.26. Australia’s S&P/ASX 200 added 0.5% to 7,374.10. The South Korean Kospi gained 0.7% to 2,730.13. Hong Kong’s Hang Seng jumped 2.4% to 22,410.06, while the Shanghai Composite rose 0.5% to 3,274.69.
“With few levers left to put pressure on Russia short of military intervention, the market is beginning to price in the loss of a significant amount of Russian oil that needs to be backfilled. It could take years for Russian oil markets to normalize, if ever,” said Stephen Innes, managing partner at SPI Asset Management.
Bond yields rose sharply for the second day in a row, reflecting expectations of more aggressive interest rate hikes from the Federal Reserve as the central bank moves to stifle the highest inflation in decades . The 10-year Treasury yield climbed to 2.41% on Wednesday from 2.30% on Monday evening. The yield, which influences interest rates on mortgages and other consumer loans, was 2.14% Friday night.
The rise in bond yields and stocks comes a day after US Federal Reserve Chairman Jerome Powell said the central bank was ready to raise interest rates more aggressively in its fight against inflation. , if she needed it. Powell said the Fed would raise its benchmark short-term interest rate by half a point at multiple Fed meetings if needed.
“Perhaps investors feel that with a more proactive approach from the Fed, it won’t have to put the brakes on later,” said Sam Stovall, chief investment strategist at CFRA.
Tech companies led the rally on Tuesday.
The S&P 500 rose 1.1% to 4,511.61, with more than 70% of stocks in the benchmark index posting gains. The Dow Jones Industrial Average gained 0.7% to 34,807.46. The tech-heavy Nasdaq rose 2% to 14,108.82.
Small company stocks also rebounded. The Russell 2000 Index added 1.1% to 2,088.34.
Markets have been choppy as Wall Street adjusts to slowing economic growth now that federal spending on various stimulus measures has faded.
“It’s actually pretty normal, but it doesn’t seem normal because the last few years have been really strong,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth.
Last Wednesday, the central bank announced a quarter-point rate hike, its first interest rate hike since 2018. The Fed has not raised its key rate by half a point since May 2000.
Energy and commodity prices were already high as demand outstripped supply amid the global economic recovery, but the war in Ukraine pushed prices for oil, wheat and others even higher. high. These higher costs and shipping issues make operations more expensive for businesses. Many of these costs have been passed on to consumers, and rising prices for food, clothing, and other goods could cause them to cut back on spending, leading to slower economic growth.
Technology and communications stocks generated much of the S&P 500’s gains on Tuesday, as did companies that rely on consumer spending. Apple rose 2.1% and Twitter gained 2.6%. Nike added 2.2% after reporting surprisingly strong third-quarter financial results. Energy stocks fell as oil prices fell.
Banks helped drive the market higher as bond yields continued to rise. Higher bond yields allow banks to charge more lucrative interest on loans. Bank of America gained 3.1% and JPMorgan Chase gained 2.1%.
In energy trading, benchmark U.S. crude added $1.22 to $110.49 a barrel. Brent, the international standard, rose $1.47 to $116.95 a barrel.
Investors will soon begin to prepare for the next round of corporate earnings reports as the current quarter draws to a close at the end of March, which could provide a clearer picture of how industries continue to manage the rise. costs.
In currency trading, the US dollar rose slightly to 121.02 Japanese yen from 120.81 yen. The euro was little changed, trading at $1.1034 from $1.1033 the previous day.
AP Business Writers Damian J. Troise and Alex Veiga contributed.