HONG KONG (`) — Asian stocks rose Monday after Wall Street closed its third straight week with a small straight gain.
U.S. futures were lower while oil prices rose as investors await OPEC Plus meetings.
Japan’s Nikkei 225 index broke through its September peak and hit a 33-year high, then fell to 33,388.03, down 0.6%.
Hong Kong’s Hang Seng rose 1.5% to 17,719.07 and the Shanghai Composite Index rose 0.4% to 3,066.85. China said on Monday it would keep its key interest rates unchanged as expected, citing a weaker yuan and the need to assess the impact of recent stimulus measures on the economy.
In South Korea, the Kospi was 1% higher at 2,495.60. Australia’s S&P/ASX 200 rose 0.1% to 7,058.40. Taiwan’s Taiex has changed little. The SET in Bangkok rose 0.2% as the state planning agency said on Monday that Thailand’s economy grew slower than expected in the last quarter due to weakness in exports and agriculture, despite strong consumer spending and a rebound in tourism.
On Friday, the S&P 500 rose 0.1% to 4,514.02, near its highest level in three months. The Dow Jones Industrial Average rose less than 0.1% to 34,947.28 and the Nasdaq Composite gained 0.1% to 14,125.48.
Several retailers posted strong gains after reporting better-than-analysts expected results for the latest quarter. Gap rose 30.6% after the company reported a much higher profit than Wall Street had forecast, more than doubling its stock’s year-to-date gain. Ross Stores rose 7.2% after reporting stronger-than-expected profit and sales.
On the losing side was BJ’s Wholesale Club, which fell 4.8%, although it also reported better-than-expected results. Analysts pointed to an underlying sales figure that excludes the boost from store openings, which fell short of expectations.
Retailers are wrapping up a better-than-hoped summer earnings reporting season. Companies in the S&P 500 are on track to report their first overall growth in a year, according to FactSet.
More important are the hopes that inflation has cooled enough for the Federal Reserve to finally stop its market-damaging interest rate hikes.
The Fed has already raised its key interest rate to its highest level since 2001 and is trying to slow the economy and squeeze financial markets just enough to bring inflation under control without triggering a painful recession.
Now traders are trying to bet on when the Fed might actually start cutting interest rates, which could boost investment prices and give oxygen to the financial system. The Fed has said it plans to keep interest rates high for a while longer to ensure the battle against inflation is finally won. However, traders believe that rate cuts could begin as early as early summer 2024.
In the bond market, the yield on the 10-year Treasury note rose to 4.45% from 4.44% late Friday. Just a few weeks ago, it was at over 5%, its highest level since 2007, undercutting the prices of stocks and other investments.
Too much of a fall in Treasury yields and too much of a rise in stock prices could be detrimental to Wall Street. Chairman Jerome Powell said after the Fed’s latest rate meeting that it may not raise rates again if the rise in Treasury yields and fall in stock prices over the summer remained “persistent.” This is because such pressure alone could act as a substitute for further interest rate hikes.
One source of potential inflation concerns has receded in recent weeks. Oil prices have fallen amid concerns about a mismatch between too much crude supply and too little demand.
A barrel of U.S. crude for delivery in December rose 69 cents to $76.73. The stock rose $2.99 to close at $75.89 late Friday. This meant he was able to make up for some of his heavy losses from earlier in the week. But it is still well below its level of over $93 at the end of September.
Brent crude, the international standard, rose 73 cents to $81.34 a barrel.
In foreign exchange trading, the US dollar fell to 149.15 Japanese yen from 149.58 yen. Last week the exchange rate was around 152 yen per dollar, but analysts said expectations of lower U.S. interest rates would spur dollar sales and push the yen higher.
The euro was at $1.0917, up from $1.0912.
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