As a result of a Wall Street surge spurred by upbeat news on consumer sentiment and job opportunities, Asian shares increased on Wednesday.
The benchmark Nikkei 225 index for Japan increased 0.3% to 32,312.75 in afternoon trading. The Kospi in South Korea increased 0.4% to 2,563.37. The Shanghai Composite increased 0.1% to 3,139.28, while Hong Kong’s Hang Seng increased 0.5% to 18,574.12.
After the Australian Bureau of Statistics revealed that the monthly Consumer Price Index indicator increased 4.9% in the 12 months leading up to July, Australia’s S&P/ASX 200 increased 1.2% to 7,297.70.
The indicator dropped below 5% for the first time since February 2022 since that was less than the forecasted 5.2%.
Although we are probably nearing the end of the RBA’s tightening process, the central bank may continue to maintain its hawkish-pause position for some policy flexibility given that it is still far from the RBA’s 2% to 3% target.
The S&P 500 gained 1.5% on Wall Street, reaching 4,497.63, its highest level since early June and third consecutive increase. The Nasdaq composite ended 1.7% higher at 13,943.76 while the Dow Jones Industrial Average gained 0.8% to close at 34,852.67.
Tech stocks drove Asian shares
Large tech stocks were the main driver of Tuesday’s surge in Asian shares. Nvidia increased 4.2% and Apple increased 2.2%. On the New York Stock Exchange, advancers exceeded decliners by a ratio of 4 to 1. Overall, bond yields decreased. Markets in Asia and Europe also increased.
Investors were looking at news on consumer confidence and the labor market when the most recent increases occurred. Consumer confidence declined in August, according to research from the Conference Board, surprise analysts who were anticipating levels to remain stable around the high July score. Considering the ongoing pressure from inflation, consumer confidence and spending have been regularly monitored.
Also on Tuesday, the government said that job opportunities dropped more than expected to their lowest level since March 2021. The survey also revealed that for the second consecutive month, fewer Americans were abandoning their jobs, which is a certain indication that the labor market is cooling in a way that could lower inflation.
A robust employment market has been hailed as a safeguard against a recession, but it has complicated the Fed’s efforts to control inflation. Because there are fewer job openings and fewer resignations, there is less pressure on firms to raise wages in order to attract and retain employees, therefore the central bank is likely to appreciate the most recent figures.
According to Sam Millette, fixed income strategist at Commonwealth Financial Network, “markets reacted to the release of the consumer confidence and job opening reports by rallying, with both bonds and stocks up on the news as odds for a Federal Reserve rate hike at their next meeting in September fell.”
In an effort to get inflation back down to its target of 2%, the Fed has been hiking its main interest rate for more than a year, to its highest level since 2001. At its most recent meeting, the central bank kept interest rates unchanged, and Wall Street is betting that it will do the same at its meeting in September.
This week will bring several more significant economic data for investors and experts. Later on Wednesday, the government will offer an additional report on the country’s gross domestic product. On Friday, it will also make available its monthly employment report for August.
The most recent consumer confidence and job openings figures caused a large decline in the yield on the 2-year Treasury, which measures expectations for the Fed. From around 5.03% immediately before the report was released, it decreased to 4.90%. It was 5.05% as of late Monday. The yield on the 10-year Treasury likewise decreased, falling to 4.12% from 4.21% late on Monday.
Benchmark U.S. crude increased 34 cents to $81.50 a barrel in the energy market. The benchmark crude, Brent, increased 27 cents to $85.76 a barrel.
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The American dollar grew somewhat in currency trade, rising to 146.23 Japanese yen from 145.87 yen. As opposed to $1.0881, the euro now costs $1.0877.