Asian stocks follow Wall St up on interest rate hopes

By JOE McDONALD
AP Business Writer

BEIJING (AP) — Asian stock markets followed Wall Street higher Friday after a Federal Reserve official raised hopes the U.S. central bank might not step up its anti-inflation fight as much as feared.

Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices retreated.

Wall Street rose Wednesday for the first time in three days after the president of the Federal Reserve Bank of Atlanta, Raphael Bostic, expressed support for raising the Fed’s benchmark lending rate to a range of 5% to 5.25% — less than many investors are forecasting. Bostic said the Fed might be able to suspend additional rate increases by mid-year, sooner than some expect.

Stocks advanced following those “dovish comments,” said Anderson Alves of ActivTrades in a report.

The Shanghai Composite Index rose 0.4% to 3,322.11 and the Hang Seng in Hong Kong gained 0.8% to 20,582.54.

China is beginning its annual legislative session, where leaders are expected to affirm policies meant to spur growth after a long slowdown worsened by COVID-19.

The Nikkei 225 in Tokyo gained 1.4% after government data showed Japan’s unemployment rate edged lower in January.

The Kospi in Seoul gained less than 0.1% to 2,427.07 and Sydney’s S&P-ASX 200 added 0.4% to 7,281.20.

New Zealand and Bangkok declined while Singapore and Jakarta advanced.

On Wall Street, the benchmark S&P 500 index rose 0.8% to 3,981.35, rebounding from a loss early in the day following Bostic’s comments.

The Dow Jones Industrial Average added 1% to 33,003.57. The Nasdaq composite gained 83.50, or 0.7%, to 11,462.98.

Bostic’s comments countered comments by other Fed officials who say rates might have to be raised more and stay elevated longer to extinguish stubborn inflation after job growth, consumer spending and price rises were stronger than expected.

Data on Thursday showed fewer Americans applied for unemployment benefits last week despite interest rate hikes to cool business activity. That is positive for workers, but the Fed worries strong employment might fuel inflation.

Traders have raised forecasts of how high the Fed will raise rates and for how long.

Treasury yields, which respond to expectations of Fed policy, widened again Thursday.

The yield on the 10-year Treasury, or the difference between its market price and payout at maturity, widened to 4.06% from 4.00% late Wednesday and from less than 3.40% earlier this year. It is near its highest level in four months.

The two-year yield rose to 4.90% from 4.88%. It is close to a 16-year high.

Investors also are cutting expectations of U.S. corporate profits due to warnings inflation and interest rates might cool consumer demand.

Macy’s rose 11.1% after reporting stronger profit and revenue for the holidays than analysts expected. It also gave a forecasted range for earnings this year that was above some analysts’ expectations.

On the losing side was Telsa, which sank 5.9%. It said its next generation of vehicles will cost half as much but gave few details about its design.

In energy markets, benchmark U.S. crude lost 27 cents to $77.89 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents on Thursday to $78.16. Brent crude, the price basis for international oil trading, shed 28 cents to $84.47 per barrel in London. It gained 44 cents the previous session to $84.75.

The dollar declined to 136.59 yen from Thursday’s 136.76 yen. The euro gained to $1.0608 from $1.0590.