Asian stocks rise after Wall Street sinks for third day
Asian stock markets rose on Friday as traders eagerly awaited U.S. employment cost data that could influence the Federal Reserve’s decisions on planned interest rate hikes.
Shanghai, Tokyo and Seoul won. Hong Kong refused.
Wall Street fell for a third day on Thursday after the US government announced the economy grew 5.7% last year, its highest annual rate since 1984.
Investors were eagerly awaiting U.S. employment cost data on when and how much the Fed might raise interest rates to curb soaring inflation. Investors are expecting at least four rate hikes this year after Fed officials said stimulus measures that are boosting stock prices would be phased out sooner than expected.
The employment cost index is expected to show that the price of labor rose by around 1.2% quarter-on-quarter in the last three months of 2021.
“Another strong wage hike could amplify market expectations” of an unusually large rate hike of 0.5 percentage points as early as March, ActivTrades’ Anderson Alves said in a report.
The Shanghai Composite Index rose less than 0.1% to 3,396.07 while the Hang Seng in Hong Kong fell 0.8% to 23,606.45.
The Nikkei 225 in Tokyo jumped 2.1% to 26,731.91, recovering most of its losses from the previous day’s 2.5% decline.
Seoul’s Kospi rose 1.4% to 2,650.23 while Sydney’s S&P-ASX 200 rose 2.3% to 6,993.80.
The Indian Sensex opened 1.1% higher at 57,883.16. New Zealand fell 1.6% as Southeast Asian markets rose.
On Wall Street, the benchmark S&P 500 fell 0.5% to 4,326.51 after official data showed the US economy grew 5.7% last year, its highest rate. higher since the 7.2% jump in 1984.
The index is less than 10 points away from entering a correction, meaning a 10% decline from its all-time high on January 3.
The Dow Jones Industrial Average slipped less than 0.1% to 34,160.78. The Nasdaq composite fell 1.4% to 13,352.78.
Stocks have been on a rollercoaster ride this week as investors try to figure out what the Fed will do after Powell said inflationary pressures aren’t abating.
“The Fed got inflation wrong and the rush to raise interest rates this year is dragging down the best performing assets during the pandemic,” Oanda’s Edward Moya said in a report.
Businesses that rely on consumer spending and banks sank. Royal Caribbean fell 6.3% and JPMorgan Chase 1.8%.
Tech stocks lost ground. Expensive technology companies and other growth stocks are less attractive when rates rise. Nvidia fell 3.6%.
In energy markets, benchmark U.S. crude rose 48 cents to $87.09 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 74 cents on Thursday to $86.61. Brent crude, the price base for international oils, rose 40 cents to $88.57 a barrel in London.
The dollar gained 115.42 yen from 115.31 yen on Thursday. The euro fell from $1.1142 to $1.1151.