Stocks advanced in Asia on Wednesday after a shaky day on Wall Street, when the S&P 500 returned most of its gains from a day earlier.
Investors have recovered from a easing in bond prices that has eased concerns about possible rate hikes. Bond yields have fallen and the yield on the 10-year Treasury fell to 1.40% early on Wednesday.
But expectations of stronger economic growth in the coming months continue to raise concerns that interest rates will rise.
“It feels like we are in the eyes of the storm,” says Stephen Innes from Axi in a comment. Investors have recently focused on selling expensive technical stocks but are also looking at political changes as President Joe Biden’s $ 1.9 billion stimulus package enters the Senate after passing the House.
“How much overheating and inflation Biden’s fiscal stimulus will generate remains at the top of virtually every market conversation,” Innes said.
In Hong Kong Hang Hang
increased by 1.7%. Tokyo Nikkei 225 Index
added 0.2%, while Kospi
in Seoul took up 0.7%. Shanghai Composite Index
Australian S & P / ASX 200
received 0.8% after the government reported that the economy grew by 3.1% quarterly, but minus 1.1% annually, during the fourth quarter last year. The better-than-expected result helped consumer demand and government spending, analysts said.
On Tuesday, the S&P 500 arrives
fell 0.8% to 3,870.29 after flipping through small gains and losses. A day earlier, the benchmark index had jumped 2.4% for its best result since June. Technology and internet stocks accounted for much of the sales, a turnaround from a day earlier.
Dow Jones Industrial Average
lost 0.5% to 31391.52. The technically heavy Nasdaq composite
fell 1.7% to 13,358.79.
Higher interest rates force investors to reconsider how much they are willing to pay for stocks, making every $ 1 profit that companies earn a little less valuable. This causes Wall Street to reconsider the value of technology stocks, largely because their recent dominance made them look even more expensive than the rest of the market.
Treasury yields recently rose above 1.50% with expectations of economic growth and inflation, from around 0.9% at the beginning of the year. Such an increase makes borrowing more expensive for home buyers, mortgage companies and virtually everyone else. It can slow down economic growth.
On Tuesday, central bank governor Lael Brainard sought to calm financial markets by emphasizing that the Fed, while generally optimistic about the economy, is still far from raising interest rates or reducing its $ 120 billion a month in asset purchases.
She also said that the Fed is closely monitoring the recent rise in 10-year government returns and investors’ inflation expectations. But she repeatedly said that the economy is ten million jobs less than its pre-pandemic level and that the Fed would keep prices almost zero until the labor market has fully recovered.
“We have some distance to go to reach our goals,” of higher inflation and lower unemployment, Brainard said.
Federal Reserve Chairman Jerome Powell is scheduled to speak on Thursday, and at the end of the week comes the government’s job report, which is usually the highest economic report of each month. It also contains figures for how much wages are rising across the economy, an important part of inflation.
In other trade, the US benchmark for crude oil
increased 20 cents to $ 59.95 per barrel in electronic trading on the New York Mercantile Exchange. It dropped 89 cents to $ 59.75 a barrel on Tuesday. Burnt raw
the international standard added 27 cents to $ 62.97 per barrel.
rose to 106.85 Japanese yen from 106.68 yen late on Tuesday.