TOKYO — Asian stocks were largely higher on Thursday as Wall Street and global markets await a much-anticipated speech from the US Federal Reserve chairman on interest rates at the end of the week.
Benchmarks rose in Japan, Australia and South Korea. Trading in Hong Kong was postponed due to a storm, while Shanghai shares rose but remained virtually unchanged in morning trading.
Market observers say stock prices are likely to fluctuate for some time, whether the focus has been on managing inflation or recession risks. In Asia, a wait-and-see mood has emerged in recent sessions as markets wait for signs from the Fed.
Chinese stocks have fallen this week amid recent rate cuts by the People’s Bank of China, which also announced policies to stimulate the economy.
“Market participants may want to see a more consistent recovery as a measure of policy success before confidence is lifted,” said Yeap Jun Rong, market strategist at IG in Singapore.
The Japanese benchmark Nikkei 225 rose 0.5% in morning trading to 28,460.60. Australian S&P/ASX 200 gained 0.8% to 7,052.40. The South Korean Kospi rose 0.8% to 2,467.09 points. The Shanghai Composite had changed little at 3,215.77. Trade in Hong Kong was delayed by a storm.
On Wall Street, the S&P 500 was up 12.04 points, or 0.3%, to 4,140.77 as traders in general again held back from making big moves. The Dow Jones Industrial Average rose 59.64 or 0.2% to 32,969.23 and the Nasdaq composite rose 50.23 or 0.4% to 12,431.53.
It was the second consecutive day of modest moves for the market, but they have been following some serious up and down swings in recent weeks.
Stocks rose all summer in hopes that inflation was nearing its peak and that the Federal Reserve might raise interest rates less aggressively than previously feared. But recent comments from Fed officials have cooled such expectations, leaving Wall Street on Monday for its worst day in months. Discouraging reports about the economy are now pointing to the risk of a recession.
Wall Street’s focus remains centered on Friday, when Fed Chair Jerome Powell delivers a speech at an annual economic conference in Jackson Hole, Wyoming. It has been the backdrop for market-moving speeches in the past, leading investors to hope Powell will shed light on further rate hikes. Will he be hawkish, what traders call a preference for aggressive rate hikes? Or dovish, what Wall Street speaks for easier conditions?
Brian Jacobsen, senior investment strategist at Allspring Global Investments, doesn’t expect Powell to be clearly one or the other.
“I don’t think he wants to come across as hawkish or dovish, maybe he wants to look like a chicken,” Jacobsen said, referring to the many variables that could change the Fed’s thinking ahead of its next interest rate policy meeting in September.
Jacobsen warned that the speech could be a “nothing citizen” with little to chew on, though the market might view that as a positive, given some expectations that Powell would sound hawkish.
Higher interest rates slow the economy in hopes of undermining inflation. But they also risk suffocating the economy if done too aggressively, and they drive down the prices of all kinds of investments.
Treasury yields have risen recently, partly in anticipation of the Fed continuing to lean toward an aggressive rate hike to quell the worst inflation in decades. The two-year yield, which usually follows Fed expectations, rose to 3.40% from 3.30% at the end of Tuesday.
The 10-year yield, which helps determine the rates for mortgages and many types of loans, rose from 3.05% to 3.11% after a report showed US durable goods orders were stable in July. Excluding transport, however, growth was stronger than economists had expected.
In the stock market, Intuit rose 3.6% for one of the bigger gains in the S&P 500. TurboTax owner delivered stronger-than-expected results for the last quarter and forecast revenue for the coming fiscal year that exceeded some analysts’ expectations.
On the losing side were several retailers, which are among the last companies to report how much profit they made in the spring.
Nordstrom fell 20% after lowering its financial forecast for the year, though it reported stronger-than-expected profits for the last quarter. It is the latest major retailer to say it is struggling to keep up with its customers’ changing shopping patterns.
Shoppers are shifting their spending from stores to travel and other experiences. Those still coming in are seeing their purchasing power undermined by high inflation, which puts lower incomes in particular under pressure. That has confronted the industry with mountains of unsold inventory.
Advance Auto Parts fell 9.6% after quarterly results fell short of expectations. The auto parts chain said its DIY customers are coming under pressure from high inflation and gasoline prices well above year-ago levels.
In energy trading, the US benchmark rose 72 cents to $95.61 a barrel. Brent oil, the international standard, added 77 cents to $101.99.
In currency trading, the US dollar fell from 137.09 yen to 136.74 Japanese yen. The euro had changed little at 99 cents.
AP Business Writer Stan Choe contributed.
Yuri Kageyama is on Twitter
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