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Tuesday, January 31, 2023
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Tuesday, January 31, 2023
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    Asian markets mostly higher, tracking Wall Street gains

    BANGKOK (AP) – Shares advanced yesterday in Asia after news that United States (US) consumer inflation slowed last month pushed Wall Street benchmarks higher.

    Tokyo’s Nikkei 225 index fell 1.3 per cent to 26,119.52 on speculation that the Bank of Japan (BOJ) might relent and tighten its ultra-loose monetary policy as the yield on 10-year Japanese government bonds was pushed beyond the central bank’s cap of 0.5 per cent on heavy selling ahead of next week’s policy setting meeting.

    The BOJ has kept its key interest rate at minus 0.1 per cent, maintaining that downward pressure from a likely recession is a bigger risk than inflation, which has remained at relatively moderate levels in Japan.

    Shares in Fast Retailing, which shot up earlier in the week on news it would hike wages by as much as 40 per cent, dropped 6.4 per cent after the company reported weaker than expected profit in the previous quarter.

    China reported its trade surplus ballooned to a record USD877.6 billion in 2022 as exports rose seven per cent despite weakening US and European demand and anti-virus controls that temporarily shut down Shanghai and other industrial centres. The country’s politically sensitive trade surplus expanded by 29.7 per cent from 2021′s record, already the highest ever for any economy.

    Hong Kong’s Hang Seng rose 0.5 per cent to 21,621.96 and the Shanghai Composite index climbed 0.5 per cent to 3,180.27. The Kospi in Seoul added 0.4 per cent to 2,388.58, while Australia’s S&P/ASX 200 jumped 0.7 per cent to 7,328.10.

    Bangkok’s SET dropped 0.7 per cent.

    People walk by monitors showing Japan’s Nikkei 225 index at a securities firm in Tokyo, Japan. PHOTO: AP

    On Thursday, the S&P 500 rose 0.3 per cent to 3,983.17. The Dow Jones Industrial Average gained 0.6 per cent to 34,189.97. The Nasdaq advanced 0.6 per cent to 11,001.10 Small company stocks outpaced the broader market. The Russell 2000 picked up 1.7 per cent, to 1,876.06. Every major index is on track for weekly gains.

    The report showing inflation slowed in December revived hopes that the Federal Reserve may go easier on the economy, using smaller interest rate hikes to cool prices. Such increases can stifle inflation, but they do so by slowing the economy and risk causing a recession. They also hurt investment prices.

    Analysts warned investors not to get carried away. There’s still pressure on the economy from high rates and more big swings may still be to come.

    Inflation has been easing for six straight months. Even though it slowed to 6.5 per cent last month from its peak of over nine per cent in June, that’s still high. The Fed has been adamant that it plans to continue raising rates this year and that it sees no rate cuts happening until 2024 at the earliest.

    Some areas of the economy remain strong, threatening to keep up the pressure on inflation.

    Chief among them is the labour market. A report on Thursday showed fewer workers filed for unemployment benefits last week. That’s an indication layoffs remain low even though some big tech companies have made high-profile announcements on job cuts.

    A strong job market is of course good for workers, particularly when their raises have been failing to keep up with inflation. But the Fed maintains that wage gains could lead companies to raise prices to cover their higher costs and only worsen inflation, even though workers’ wage gains slowed in December.

    Earnings reporting season kicked off in earnest yesterday, with JPMorgan Chase and UnitedHealth Group among the day’s headliners. One big worry on Wall Street is that high inflation and a slowing global economy are eating into profits for big companies.

    Analysts said this could be the first time earnings per share for S&P 500 companies fall from year-ago levels since 2020.

    In other trading yesterday, US benchmark crude oil lost 18 cents to USD78.21 per barrel in electronic trading on the New York Mercantile Exchange. It gained 98 cents to USD78.39 a barrel on Thursday.

    Brent crude, the pricing basis for international trading, lost 31 cents to USD83.72 per barrel.

    The dollar fell to JPY129.16 from JPY129.24. The euro slipped to USD1.0838 from USD1.0849.

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