TOKYO — Asian shares advanced Friday, tracking a rally on Wall Street following reports suggesting the economy and corporate profits may be doing better than feared.
In Tokyo, data showed the core consumer price index was up 4.3%, slightly higher than expected at 4.2%, and higher than the Bank of Japan’s target of 2%.
“This seeks to challenge an eventual policy shift for the central bank, although the government’s energy subsidies next month could be tapped on to push back any changes for now,” Yeap Jun Rong, a market analyst at IG, said in a commentary.
Japan’s benchmark Nikkei 225
NIK,
+0.12%
rose nearly 0.1% in morning trading. Australia’s S&P/ASX 200
XJO,
+0.38%
added 0.4% and South Korea’s Kospi
180721,
+0.68%
jumped 0.7%. Hong Kong’s Hang Seng
HSI,
-0.05%
slipped 0.1%. Stocks slipped slightly in Malaysia
FBMKLCI,
-0.26%,
but rose in Singapore
STI,
+0.43%
and Indonesia
JAKIDX,
+0.94%.
Markets remained closed in Shanghai for the Lunar New Year holidays.
Stocks climbed on Wall Street to their highest level in nearly eight weeks after the Commerce Department reported the U.S. economy expanded at a 2.9% annual pace in the last quarter, ending 2022 with momentum despite higher interest rates and widespread fears of a looming recession. That beat economists’ forecasts for a 2.3% expansion.
The S&P 500
SPX,
+1.10%
climbed 1.1% to clinch its highest finish since Dec. 2, at 4,060.43. The Dow
DJIA,
+0.61%
climbed 0.6% to 33,949.41, and the Nasdaq composite
COMP,
+1.76%
gained 1.8% to 11,512.41.
More swings may still be ahead, as Wall Street digests a growing torrent of earnings and economic reports. Markets have veered up and down recently as worries about a severe recession and drop-off in profits battle against hopes the economy can manage a soft landing and the Federal Reserve may ease up on interest rates.
Other reports Thursday showed that orders for long-lasting goods from factories strengthened by more than expected in December and fewer workers applied for jobless claims than expected last week.
Strong data suggest the economy can withstand last year’s blizzard of rate hikes by the Fed, plus at least one more expected next week, without crashing to a deep recession. Higher rates intentionally slow the economy by making it more expensive to borrow to buy a home, a car or anything else on credit. They also drag down prices for stocks and other investments.
But a stronger-than-expected economy, particularly in the job market, could push the Fed to keep rates higher for longer to ensure inflation really is crushed. The Fed has already been saying repeatedly that it plans to do just that, at least through the end of the year, though many investors don’t seem to be buying it.
The yield on the 10-year Treasury, which helps set rates for mortgages and other loans crucial for the economy, rose to 3.49% from 3.45% late Wednesday. The two-year yield, which tends to more closely track expectations for Fed actions on interest rates, rose to 4.18% from 4.13%.
While Thursday’s report on the economy may have been encouraging at first blush, it included some concerning signals of slowdown underneath. It’s also backward looking, said Megan Horneman, chief investment officer at Verdence Capital Advisors.
“The first half of this year is going to be tough,” she said, pointing to recent weakness in both the manufacturing and services sectors of the economy.
In energy trading, benchmark U.S. crude
CLH23,
+0.41%
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,
+0.41%,
the international pricing standard, gained 17 cents to $87.64 a barrel in London.
In currency trading, the U.S. dollar
USDJPY,
-0.14%
edged down to 129.83 Japanese yen from 130.23 yen.