Asian markets are turning higher, tracking the rally of Wall Street

TOKYO – Asian stocks rose on Friday, tracking a rally on Wall Street after reports that the economy and corporate earnings may do better than feared.

In Tokyo, data showed that core CPI rose 4.3%, slightly above the expected 4.2%, and above the Bank of Japan’s target of 2%.

“This seeks to challenge an eventual shift in central bank policy, although government energy subsidies could be leveraged next month to deter any changes for now,” Yeap Jun Rong, market analyst at IG, said in a comment.

Japan’s Nikkei 225 index,
It rose by about 0.1% in morning trading. Australia S&P/ASX 200 XJO,
added 0.4% and South Korea Kospi 180,721,
jumped 0.7%. Hang Seng HSI in Hong Kong,
down 0.1%. Shares fell slightly in Malaysia FBMKLCI,
But it went up in Singapore STI,
Indonesia JAKIDX,

Markets remained closed in Shanghai due to the Lunar New Year holiday.

Stocks on Wall Street jumped to their highest level in nearly eight weeks after the Commerce Department reported The US economy expanded by 2.9%. An annual pace in the fourth quarter, it ends 2022 with momentum despite rising interest rates and widespread fears of a looming recession. This beat economists’ expectations for an expansion of 2.3%.

S&P 500 SPX Index,
It rose 1.1% to end its highest finish since December 2 at 4,060.43. The Dow DJIA,
rose 0.6% to 33,949.41, the Nasdaq Composite Index,
Gain 1.8% to 11,512.41.

There could be more volatility to come, as Wall Street absorbs a growing torrent of earnings and economic reports. The markets have gone up and down lately Concerns about a severe recession And the drop in earnings jostle against hopes that the economy can manage a soft landing and the Federal Reserve may ease interest rates.

Other reports on Thursday showed that orders for long-term factory goods strengthened more-than-expected in December and Fewer workers have applied for unemployment claims than expected last week.

The strong data suggests the economy can weather a storm of interest rate hikes last year by the Fed, plus at least one rate hike expected next week, without collapsing into a deep recession. Higher rates intentionally slow the economy by making it more expensive to borrow to buy a house, car, or something else on credit. They also lower the prices of stocks and other investments.

But a stronger-than-expected economy, particularly in the labor market, could prompt the Fed to keep interest rates higher for longer to ensure inflation is truly crushed. The Fed has said repeatedly that it plans to do so, at least through the end of the year, though many investors don’t seem to be buying it.

The yield on 10-year Treasury notes, which helps set prices for mortgages and other loans important to the economy, rose to 3.49% from 3.45% late Wednesday. The two-year yield, which tends to closely track expectations for Fed action on interest rates, rose to 4.18% from 4.13%.

While Thursday’s report on the economy may be encouraging at first glance, it did include some worrying signs of a slowdown below. It also looks backwards, said Megan Hornemann, chief investment officer at Verdence Capital Advisors.

“The first half of this year is going to be tough,” she said, noting recent weakness in both the manufacturing and service sectors of the economy.

In energy trading, the CLH23 US Crude Oil Index,
It rose 21 cents to $81.22 a barrel in electronic trading on the New York Mercantile Exchange. It lost 14 cents to $81.01 on Thursday.

Brent Crude BRNH23,
The international pricing benchmark, it rose 17 cents to $87.64 a barrel in London.

In currency trading, the US dollar USDJPY,
It fell to 129.83 yen from 130.23 yen.

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