rainn.png
Thursday August 11th, 2022 2:25AM

Asian shares gain after Fed assurance on rates lifts Wall St

By The Associated Press
Related Articles
  Contact Editor

TOKYO (AP) — Asian shares advanced Thursday after the Federal Reserve raised its key interest rate by three-quarters of a point and signaled more rate hikes were coming to fight inflation.

Wall Street rallied Wednesday after the Fed’s hike, the biggest since 1994, as investors took heart from Chair Jerome Powell’s comments suggesting future rate increases may be more modest. The bigger than usual rate hike also had been anticipated for weeks and came as no surprise.

The Bank of Japan is holding a two-day policy meeting, starting Thursday. The Japanese central bank is under pressure to act given downward pressures on the yen from U.S. rate hikes and super-low rates in Japan.

Investors have been selling yen and buying dollars in anticipation of higher yields from dollar-denominated holdings. Japanese politicians and the central bank chief have expressed worries about the declining yen, but no dramatic policy changes are expected.

Early Thursday, the U.S. dollar edged up to 134.56 Japanese yen from 133.82 yen. It recently topped 135 yen, the highest level in 20 years. The euro cost $1.0438, down from $1.0447.

Japan's benchmark Nikkei 225 surged 1.8% in morning trading to 26,793.19. Australia's S&P/ASX 200 gained 0.4% to 6,627.50. South Korea's Kospi jumped 1.2% to 2,476.61. Hong Kong's Hang Seng shed 0.6% to 21,178.90, while the Shanghai Composite quickly lost earlier gains to inch down 0.1% to 3,301.89.

Worries are also growing about how the Japanese economy will hold up as wages decline and growth stumbles.

The Finance Ministry reported Japan recorded a nearly 2.4 trillion yen ($17.9 billion) trade deficit last month, its 10th straight month of a red ink. Japan racked up its highest imports for the month of May since 1979, as surging energy prices and a weak yen sent the value of imports soaring. Resource-poor Japan imports almost all its energy.

On Wall Street, the S&P 500 climbed 1.5% to 3,789.99 after whipping through roller-coaster trading immediately following the Fed's latest move.

In the bond market, Treasury yields eased after Powell hinted at smaller rate increases later this year. Earlier this week, yields had shot to their highest levels in more than a decade on expectations for a more aggressive Fed.

The Fed is “not trying to induce a recession now, let’s be clear about that,” Powell said. He called Wednesday’s big increase “front-end loading.”

The two-year Treasury yield fell to 3.21% from 3.45% late Tuesday, with the biggest move happening after Powell said 0.75 percentage point rate hikes wouldn’t be common. The yield on the 10-year Treasury pulled back to 3.34% from 3.48%.

“The bond market right now is driving the broader market and that will continue,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.

The Dow Jones Industrial Average swung between gains and losses before finishing 1% higher, at 30,668.53. The Nasdaq composite jumped 2.5%, to 11,099.15.

The S&P 500 tumbled into a bear market earlier this week and Wednesday's gain was its first in six days.

Some analysts cautioned the rally could be short-lived given how deeply and broadly high inflation has seeped into the economy.

“Chair Powell painted as rosy a picture as could be painted, and to achieve that picture that he is laying out, that pathway, a lot has to go right,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “It’s a challenging path, and he acknowledged that.”

All kinds of investments, from bonds to bitcoin, have tumbled this year as high inflation forces central banks to swiftly remove supports propped underneath markets early in the pandemic.

Even without recession, higher interest rates hurt prices for investments. The hardest-hit have been those that soared the most in the easy-money era of ultralow interest rates, including high-growth technology stocks and cryptocurrencies.

The economy is still largely holding up amid a red-hot job market, but it has shown some signs of distress recently. Sales at U.S. retailers unexpectedly slumped in May from April.

Cryptocurrency prices continued to sink, and bitcoin dropped as low as $20,087.90, nearly 71% below its record of $68,990.90 set late last year. It was down nearly 1% at $21,770 in afternoon trading, according to CoinDesk.

Powell said Wednesday the Fed is moving “expeditiously” to get rates closer to normal levels after last week's stunning report that showed inflation at the consumer level unexpectedly accelerated last month. That dashed hopes on Wall Street that inflation may have already peaked.

The war in Ukraine has helped send prices for oil soaring because the region is a major producer of energy. COVID infections in China, meanwhile, have led to the closure of factories and disrupted supply chains. It all helped pull the S&P 500 down more than 20% from its record set in early January, putting Wall Street into what investors call a bear market.

Many of those concerns are still around, which will likely keep markets volatile.

In energy trading, benchmark U.S. crude jumped $1.19 to $116.50 a barrel in electronic trading on the New York Mercantile Exchange. It shed $3.62 on Wednesday to $115.31 a barrel. Brent crude, the international standard, added $1.01 to $119.52 a barrel.

___

AP Business Writer Stan Choe contributed.

___

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services, AP Business - Utilities
© Copyright 2022 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Police: Amazon fisherman confesses to killing missing pair
Brazilian authorities say a fisherman has confessed to killing a British journalist and an Indigenous expert in the remote Amazon and taken police to a site where human remains were found, in an apparent breakthrough in the 10-day search for the pair
1:39AM ( 20 minutes ago )
N. Korea reports another disease outbreak amid COVID-19 wave
North Korea has reported the outbreak of another infectious disease in addition to its ongoing wave of COVID-19
1:26AM ( 33 minutes ago )
Dodgers' Anderson loses no-hit bid in 9th against Angels
Tyler Anderson of the Los Angeles Dodgers lost his no-hit bid in the ninth inning, giving up a one-out triple to Shohei Ohtani in a 4-1 victory over the Los Angeles Angels
1:16AM ( 44 minutes ago )
Associated Press (AP)
Fed's aggressive rate hikes raise likelihood of a recession
Federal Reserve Chair Jerome Powell has pledged to do whatever it takes to curb inflation, now raging at a four-decade high and defying the Fed’s efforts so far to tame it
12:01AM ( 1 hour ago )
Asian shares gain after Fed assurance on rates lifts Wall St
Asian shares have advanced after the Federal Reserve raised its key interest rate by three-quarters of a point and signaled more rate hikes were coming to fight inflation
11:57PM ( 2 hours ago )
Australia commits to reducing greenhouse emissions by 43%
Australia’s new government has formally committed to a more ambitious greenhouse gas reduction target of 43% by the end of the decade in fulfillment of a key election pledge
10:12PM ( 3 hours ago )
AP Business
Fed attacks inflation with its largest rate hike since 1994
The Federal Reserve intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point — its largest hike in nearly three decades — and signaling more large rate increases to come that would raise the risk of another recession
6:18PM ( 7 hours ago )
Wall Street rallies in relief after Fed's assurance on rates
Stocks rallied in a roller-coaster day of trading on Wall Street Wednesday after the Federal Reserve hiked interest rates by the biggest margin since 1994, but also said such mega-hikes would not be common
5:16PM ( 8 hours ago )
This is how a higher Fed rate could affect your finances
Record low-interest mortgages are long gone
4:40PM ( 9 hours ago )
AP Business - Economy
Surging inflation clears way for biggest Fed hike in years
The Federal Reserve is expected to announce its largest interest rate hike since 1994 — a bigger increase than it had previously signaled and a sign that the central bank is struggling to restrain stubbornly high inflation
10:16AM ( 15 hours ago )
European Central Bank vows backstop against market turmoil
The European Central Bank has vowed to come up with a new, unspecified market backstop that could be used to buffer some countries against bond market turmoil similar to what shook the 19-country eurozone during a debt crisis more than a decade ago
9:54AM ( 16 hours ago )
Stocks open higher ahead of Fed decision on interest rates
Stocks are opening higher on Wall Street Wednesday but remain sharply lower for the week as trading remains volatile ahead of a closely watched decision later in the day on interest rates from the Federal Reserve
9:48AM ( 16 hours ago )
AP Business - Financial Markets
FAA says future planes will need to reduce carbon emissions
The Biden administration is proposing to require that future airplanes produce lower levels of greenhouse gas emissions before they can be certified
6:23PM ( 7 hours ago )
Biden sends Ukraine more weapons; US eyes report on fighters
Ukrainian President Volodymr Zelenskyy has thanked President Joe Biden for approving another $1 billion in military aid to Ukraine, the largest single tranche of weapons and equipment since the war began
3:54PM ( 10 hours ago )
Odessa, Texas, without drinking water as temperatures soar
Crews are working to restore water service to the West Texas city of Odessa, where residents have been without water amid scorching temperatures this week after an aging pipe broke
2:56PM ( 11 hours ago )
AP Business - Industries
European Central Bank gathers after borrowing costs rise
The European Central Bank’s rate-setting council will hold an unscheduled meeting “to discuss market conditions” as borrowing costs for several countries have risen after the bank said it would raise interest rates
7:58AM ( 18 hours ago )
European Central Bank to gather after borrowing costs rise
The European Central Bank’s rate-setting council will hold an unscheduled meeting “to discuss market conditions” as borrowing costs for several countries have risen after the bank said it would raise interest rates
5:36AM ( 20 hours ago )
Treasury bond yield inversion raises worries over recession
One of the more reliable warning signals for an economic recession started blinking again
4:53PM ( 1 day ago )
AP Business - Financial Services
Reduced Russian gas flow is political, German official says
Germany’s vice chancellor says Russia’s announcement that it would reduce natural gas flows through a key European pipeline by roughly 40% appears to be a political move rather than a result of technical problems
9:16AM ( 16 hours ago )
German govt seeks to resolve wind power dispute with states
The German government has unveiled a bill to resolve a long-running dispute between federal authorities and the country’s 16 states over where to build land-based wind power plants
8:09AM ( 17 hours ago )
Biden to visit 'pariah' Saudi Arabia and Israel next month
President Joe Biden will make his first trip to the Middle East next month with visits to Israel, the occupied West Bank and Saudi Arabia
6:23PM ( 1 day ago )
AP Business - Utilities
Police: Amazon fisherman confesses to killing missing pair
Brazilian authorities say a fisherman has confessed to killing a British journalist and an Indigenous expert in the remote Amazon and taken police to a site where human remains were found, in an apparent breakthrough in the 10-day search for the pair
1:39AM ( 20 minutes ago )
N. Korea reports another disease outbreak amid COVID-19 wave
North Korea has reported the outbreak of another infectious disease in addition to its ongoing wave of COVID-19
1:26AM ( 34 minutes ago )
Dodgers' Anderson loses no-hit bid in 9th against Angels
Tyler Anderson of the Los Angeles Dodgers lost his no-hit bid in the ninth inning, giving up a one-out triple to Shohei Ohtani in a 4-1 victory over the Los Angeles Angels
1:16AM ( 44 minutes ago )
Anderson's no-hit bid for Dodgers broken up in 9th by Ohtani
Tyler Anderson of the Los Angeles Dodgers has lost his bid for a no-hitter when Los Angeles Angels star Shoehi Ohtani tripled with one out in the ninth inning
1:09AM ( 51 minutes ago )
Lightning look like the upstarts in Game 1 loss to Avalanche
For much of the game it looked as if the Colorado Avalanche and not the Tampa Bay Lightning were the two-time defending Stanley Cup champions
12:52AM ( 1 hour ago )