Asian markets follow Wall St higher as recession fears ease
BEIJING (Reuters) – Asian stock markets followed Wall Street higher on Friday after two Federal Reserve officials said the U.S. economy could avoid a recession and China could increase construction spending to boost its economy. in trouble.
Shanghai, Tokyo, Hong Kong and Sydney advanced for a second day. Oil prices fell but remained above $100 a barrel.
Wall Street’s benchmark S&P 500 index rose 1.5% on Thursday after Fed interest rate-setting panelist James Bullard said a “soft landing” for the economy was still his “baseline scenario”. Another Fed panel member, Christopher Waller, said “fears of a recession are overblown.”
“Investor fears of recession have eased,” ING’s Robert Carnell and Iris Pang said in a report.
The Shanghai Composite Index rose 0.2% to 3,370.85 after reports said China may add 1.5 trillion yuan ($220 billion) to public works construction spending this year to stimulate economic growth.
The Nikkei 225 in Tokyo gained 1.4% to 26,869.82 and the Hang Seng in Hong Kong added 0.5% to 21,757.04.
The Kospi in Seoul rose 0.7% to 2,350.97 and Sydney’s S&P-ASX 200 rose 0.5% to 6,680.10. The New Zealand and Southeast Asian markets grew.
On Wall Street, the S&P 500 rose to 3,902.62 for its fourth daily gain. About three-quarters of the stocks in the index gained.
The Dow Jones Industrial Average rose 1.1% to 31,384 and the Nasdaq composite rose 2.3% to 11,621.35.
Investors fear that aggressive interest rate hikes in the United States and Europe to quell inflation, which is at its highest level in four decades, could derail global economic growth.
Bullard, who is chairman of the Federal Reserve Bank of St. Louis, said “it would make a lot of sense” to raise the U.S. central bank’s key interest rate by three-quarters of a percentage point, or triple from the usual margin, at its meeting this month. This would repeat the dramatic rate hike in mid-June, the Fed’s largest in 28 years.
Waller, speaking at a separate event, said he also backed a 0.75 percentage point hike. He said the Fed could risk “causing economic damage,” but with a strong labor market, that shouldn’t be too big a deal.
The US government is due to release June jobs data.
On Thursday, official data showed the number of Americans applying for unemployment benefits topped the 230,000 mark for the fifth week in a row. It was the highest level in almost six months.
Bloomberg News reported that China’s Ministry of Finance is considering a plan for local governments to raise funds through the sale of bonds to spend on building roads and other public works.
It was unclear if this represented additional spending or if it was future plans to sell bonds to help support economic growth, some forecasters said they fell close to zero in the semester quarter. ending in June after the closure of Shanghai and other industrial centers. .
Markets were also jittery over Russia’s invasion of Ukraine, which sent oil and other commodity prices skyrocketing.
European markets gained on Thursday after British Prime Minister Boris Johnson announced his resignation following a series of departures from his cabinet by members of his Conservative party.
In energy markets, benchmark U.S. crude fell 11 cents to $102.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $4.20 to $102.73 on Thursday. Brent crude, the price basis for international trade, fell 12 cents to $104.53 a barrel in London. It gained $3.96 the previous session at $104.65.
The dollar fell to 135.80 yen from 136.11 yen on Thursday. The euro gained $1.0170 from $1.0156.