Asian markets rise, except for Japan, ahead of US jobs report

Asian markets rise, except for Japan, ahead of US jobs report

TOKYO (AP) — Stocks were mostly higher in Asia on Friday, led by a 5.8% jump in Hong Kong’s Hang Seng index as Chinese markets were boosted by speculation that Beijing could begin to ease. pandemic restrictions.

The Tokyo Nikkei fell, catching up after Japanese markets closed on Thursday for a holiday. Investors are watching for signs of demand recovery in China and weighing the risks of further interest rate hikes by major central banks to curb inflation.

Wall Street’s benchmark S&P 500 lost 1.1% on Thursday and the tech-heavy Nasdaq Composite Index fell 1.7% a day after the Federal Reserve raised its benchmark rate for the sixth time this year. Traders are eagerly awaiting a closely watched US jobs report due out later on Friday.

Over the past few days, Chinese stocks have risen on hopes that authorities may begin to ease the country’s tight controls against COVID-19. This would alleviate supply chain disruptions that have slowed economic activity and pave the way for stronger demand from the world’s second-largest economy.

There has been no official confirmation of such policy changes.

Hong Kong’s Hang Seng jumped 16,221.86 while the Shanghai Composite added 2.1% to 3,060.39.

Elsewhere in Asia, Japan’s benchmark Nikkei 225 fell nearly 2% to 27,120.61. Australia’s S&P/ASX 200 gained 0.3% to 6,878.20, and South Korea’s Kospi gained 0.3% to 2,335.72.

Wall Street’s decline came a day after the central bank raised its benchmark rate again and signaled it may need to keep rates rising for a while to successfully crush the highest inflation since decades.

The S&P 500 fell 39.80 points to 3,719.89. The Dow fell 0.5% to 32,001.25. The Nasdaq slipped 181.86 points to 10,342.94. Small company stocks also lost ground. The Russell 2000 fell 0.5% to 1,779.73.

Expectations of higher interest rates helped push Treasury yields higher, weighing on equities. The two-year Treasury note, which tends to track expectations of future Fed moves, rose to 4.72% from 4.61% late Wednesday and is now at its highest level since 2007, according to Tradeweb.

The 10-year Treasury yield rose to 4.15% from 4.09% on Wednesday night. The rise in the 10-year Treasury yield has more than doubled mortgage rates this year and continues to put pressure on stocks.

The central bank’s latest three-quarters of a percentage point increase takes short-term interest rates to a range of 3.75% to 4%, its highest level in 15 years. Wall Street is also divided on whether the central bank will eventually raise rates to a range of 5% to 5.25% or 5.25% to 5.50% next year.

Higher rates not only slow the economy by discouraging borrowing, they also make equities less attractive relative to lower-risk assets like bonds and CDs.

Stubbornly high inflation prompted central banks around the world to raise interest rates as well. On Thursday, the Bank of England announced its largest interest rate hike in three decades. The increase is the eighth in a row for the Bank of England and the largest since 1992.

Investors were hoping for economic data signaling that the Fed might avoid further rate hikes that could go too far in the slowing economy and trigger a recession. But warmer-than-expected data from the jobs sector this week has so far signaled that the Fed will remain aggressive. On Friday, Wall Street will receive a broader update to the US government’s October jobs report.

So far, hiring and wage growth have not declined fast enough for the Fed to slow its inflation-fighting efforts. If the October data shows a stronger-than-expected rise in hiring or wages, that could put pressure on the Fed to keep raising interest rates.

The Department of Labor is expected to report that non-farm employers added 200,000 jobs last month. It would be the worst performance since December 2020, when the economy lost 115,000 jobs.

Investors will also be watching for the latest consumer inflation data. This report, the Consumer Price Index, is due out next week.

“A busy week ahead for economic releases is expected, with the focus on US and Chinese inflation figures for October. China will also update October trade figures. Meanwhile, the UK releases third quarter GDP figures while industrial production data from Germany will also be due,” S&P Global Market Intelligence said in its report for the coming week.

Wall Street has also been watching the latest corporate earnings reports closely. Reports were mixed, with many companies warning that inflation was likely to continue to put pressure on operations.

In energy trading on Friday, benchmark U.S. crude rose 67 cents to $88.84 a barrel in electronic trading on the New York Mercantile Exchange. Brent, the international standard, gained 65 cents in London to $95.32 a barrel.

In currency trading, the US dollar fell slightly to 148.06 Japanese yen from 148.25 yen. The euro cost 97.74 cents, down from 97.50 cents.

AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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