TOKYO (AP) – Asian stocks were mostly higher Thursday as investors turned their attention to what the Bank of Japan may decide on monetary policy later this week.
The Bank of Japan is not expected to raise its key rate when it concludes its meeting on Friday, but the economy is under pressure from the dollar’s prolonged rally against the Japanese yen.
“Given the recent ‘hawkish’ outcome from the Fed, if the BOJ were to stick to its usual accommodative tone on policy settings, it could pave the way for the US dollar’s uptrend against the yen Japanese to continue. Yeap Jun Rong, a market analyst at IG, said in a comment.
In currency trading, the US dollar rose to 157.01 Japanese yen from 156.71 yen. The euro is at $1.0807, up from $1.0812.
As expected, the Federal Reserve kept its key interest rate steady on Wednesday after its latest policy meeting. And Treasury yields fell by one inflation report showed that US consumers paid prices that were 3.3% higher for food, insurance and everything else last month compared to a year ago. Economists had expected to see the inflation rate stuck at 3.4%.
Japan’s benchmark Nikkei 225 fell 0.1% in morning trading to 38,831.36. Australia’s S&P/ASX 200 rose 0.5% to 7,751.00. South Korea’s Kospi rose 1.4% to 2,766.99. Hong Kong’s Hang Seng gained nearly 0.4% to 18,001.18, while the Shanghai Composite fell 0.4% to 3,026.27.
On Wall Street on Wednesday, the S&P 500 added 0.9% to its all-time high the day before, closing at 5,421.03. The Nasdaq composite also set a record high and jumped 1.5% to 17,608.44. The Dow Jones Industrial Average was down 0.1% at 38,712.21.
Smaller companies that need to borrow to grow and therefore can feel the sting of higher interest rates more than larger rivals lead the market. Smaller stocks in the Russell 2000 index jumped 1.6%.
For Wall Street, a slowdown in inflation doesn’t just help American families struggling to keep up with prices rising rapidly, it also opens the door for the Federal Reserve to lower its prime interest rate. Such a move would ease pressure on the economy and give a boost to investment prices.
Everything from bitcoin to gold to copper rose as inflation data raised expectations for future interest rate cuts. A measure of nervousness among investors in US stocks also eased.
Policymakers welcomed the latest update on inflation, but “we will need to see more good data to strengthen our confidence,” Fed Chairman Jerome Powell said. He repeated the Fed’s mantra that it needs a build-up of data showing inflation is moving steadily toward its 2% target before it cuts the federal funds rate, which is at its highest level in more than than two decades.
“We’ll have to see where the data lights the way,” he said, reiterating the Fed’s commitment to move based on where incoming reports lead.
Lower interest rates can mean easier mortgage rates, helping to inject energy into the housing market. Housebuilder DR Horton rose 3%. Builders FirstSource, which sells vinyl windows, custom millwork and other building materials, rose 5.3%.
Oracle helped lead Wall Street higher with a 13.3% jump even as it reported a weaker-than-expected quarterly profit. Financial analysts pointed to strong bookings, including contracts related to artificial intelligence training.
A buzz around artificial intelligence has helped stocks register despite concerns about high interest rates and the slowing economy they cause. Nvidia was again the strongest force pushing the S&P 500 higher, with a gain of 3.5%. The chip company has become the poster child of artificial intelligence, and its total market value has surpassed $3 trillion.
Apple was almost as strong a force driving the S&P 500 as Nvidia after rising 2.9%. Its shares have jumped in the past two days after receiving a lukewarm initial reception to the announcement from some AI related offers comes in its operating systems.
In energy trading, U.S. benchmark crude lost 27 cents to $78.23 a barrel. Brent crude, the international benchmark, fell 29 cents to $82.31 a barrel.
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AP business writer Stan Choe contributed.
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