Asian Stocks Rise, Track Wall St Gains As Earnings Rise

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BANGKOK (TBEN) — Stock prices in Asia rose Tuesday after a technology-led rally on Wall Street as investors bet the Federal Reserve will scale back rate hikes to dampen inflation.

Many markets in the region were closed for the Lunar New Year holidays.

A preliminary indication for Japan’s production remained stable in January at its lowest level in more than two years, with exports declining more rapidly. But strong technology stocks helped buy manufacturers such as electronics maker Omron, which gained 2.7%, and robot supplier Fanuc Corp., which gained 2%.

The Nikkei 225 index in Tokyo gained 1.5% to 27,299.19 and the Sensex in Mumbai rose 0.2% to 61,065.17. Australia’s S&P/ASX 200 rose 0.4% to 7,490.40, while Bangkok’s SET rose 0.3%.

“Markets are taking a pro-growth stance as investors become more comfortable with the idea of ​​an improving macro backdrop ahead of a busy week of data from both a macro and micro perspective,” said Stephen Innes of SPI Asset Management in a comment.

“And when you look under the hood in the heat of battle, you get that unmistakable sense of pandemic-era trading backed by solid moves in megacaptech stocks,” he said.

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On Monday, the S&P 500 rose 1.2% to 4,019.81. The Dow Jones Industrial Average rose 0.8% to 33,629.56 and the tech-heavy Nasdaq composite closed 2% higher at 11,364.41. Small company stocks also rose, driving the Russell 2000 Index up 1.3% to 1,890.77.

Tech stocks in the S&P 500 rose 2.3% Monday, with chipmaker Advanced Micro Devices leading the pack with a gain of 9.2%.

Markets fluctuate between hope and caution as investors watch to see if the Federal Reserve will reverse interest rate hikes designed to curb inflation, which has begun to ease in many countries in recent months. There are fears that the Fed and other central banks will go too far and push the US and other economies into recession by slowing spending and investment too much.

The Fed has already raised its key overnight rate to a range of 4.25% to 4.5% from near zero early last year, and traders are now betting on a near 99% probability that the Fed will raise interest rates by just a quarter point in February. will increase. 1, according to CME Group.

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The yield on the two-year Treasury, which tracks expectations for the Fed’s move, rose to 4.22% from 4.18% late Friday. The 10-year yield, which helps determine rates on mortgages and other major loans, rose from 3.48% to 3.52%.

A new partisan battle in Washington over the nation’s ability to borrow could rock markets if Democrats and Republicans can’t agree that the US government will borrow more.

Corporate earnings are seen as a good indicator of how well companies are coping with the slowing economy and higher costs. Profits are one of the main levers that determine stock prices.

This week, more than seven dozen companies in the S&P 500 will report their results for the last three months of 2022. This also applies to headliners such as Microsoft on Tuesday and Tesla on Wednesday.

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Such large technology-oriented companies have started laying offs to cut costs after acknowledging that they misunderstood the boom resulting from the pandemic and grew too quickly. Spotify said Monday it will cut 6% of its workforce and its stock is up 2.1%.

Big Tech stocks are a major influence on Wall Street because they are among the most valuable in the market. After flying through the pandemic thanks to super-low interest rates and a surge in demand from suddenly homebound shoppers, they’ve struggled over the past year as the Fed hiked rates sharply.

On another trading Tuesday, US benchmark crude lost 9 cents to $81.53 a barrel in electronic trading on the New York Mercantile Exchange. It lost 2 cents to $81.62 on Monday.

Brent crude, the price benchmark for international trade, lost 27 cents to $87.89 a barrel.

The dollar fell from 130.66 yen to 130.16 Japanese yen. The euro rose from $1.0875 to $1.0884.

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