TOKYO (AP) – Asian stocks rebounded on Friday to end mostly higher as investors weighed in on the war in Ukraine and what the world’s central banks can do to keep inflation under control.
The benchmark fell in morning trade but rose later in the afternoon in Tokyo, Seoul and Sydney. In China, shares declined in Hong Kong but rose in Shanghai.
Investors are weighing the latest updates from the US Federal Reserve amid concerns about rising inflation. The Fed has signaled it is ready to raise interest rates and reduce its reserves of bonds and mortgage-backed securities to rein in the highest inflation in 40 years.
“Global appetite for risk in the short term is still uncertain, with hawkish central banks weighing in on sentiment. The situation between Ukraine and Russia remains persistent, with the market now only looking for a major breakthrough to adjust to the current pricing,” Andersen Alves at ActiveTrades said in a commentary.
Japan’s benchmark Nikkei 225 fell in early morning trade but closed 0.4% higher at 26,985.80. South Korea’s Kospi rose 0.2% to 2,700.19. Australia’s S&P/ASX 200 rose 0.5% to 7,478.00. Hong Kong’s Hang Seng was down 0.4% at 21,726.57, while the Shanghai Composite ended 0.3% higher at 3,246.91.
On Wall Street, a late afternoon rally was led by technology companies. The S&P 500 rose 0.4% to 4,500.21, its first gain since two days of declines. The benchmark index is still on pace for its first weekly loss in four weeks.
The Dow Jones Industrial Average rose 0.3% to 34,583.57. The Nasdaq Composite rose 0.1% to 13,897.30.
“The market is certainly digesting a Fed that is prepared to be very aggressive in fighting inflation,” said Rob Howarth, senior investment strategist at US Bank Wealth Management.
Communications services stocks had the largest market share. Twitter fell 5.4%. Computer and printer maker HP rose 14.8% for the biggest gainer in the S&P 500 after Warren Buffett’s Berkshire Hathaway disclosed an 11% stake in the company.
The yield on the 10-year Treasury rose to 2.65% from 2.61% late Wednesday.
The central bank is backing down from lower interest rates and began providing exceptional support to the economy two years ago when the pandemic plunged the economy into recession. It already announced a quarter-percentage-point increase and expects to continue increasing rates throughout the year.
Traders are now pricing in an almost 80% chance that the Fed will raise its key overnight rate by half a percentage point at its next meeting in May. That’s twice the normal amount and something the Fed hasn’t done since 2000.
Rising inflation is putting economic growth at risk. The business is raising the prices of everything from food to clothing and this has put more pressure on consumers. Some companies have failed to compensate for the impact of inflation despite the increase in prices.
Wall Street is concerned about consumers eventually pulling back on spending because higher prices become too difficult to digest. Price hikes were responsible for increased consumer spending in March. Otherwise, the results revealed a pullback.
Rapid increases in interest rates could affect corporate earnings growth as well, although it depends on how aggressive the Fed will be.
Russia’s invasion of Ukraine has also added to concerns about inflation. Energy prices have been particularly volatile and gasoline prices have risen.
US benchmark crude rose 46 cents to $96.49 a barrel in electronic trading on the New York Mercantile Exchange. It fell 0.2% on Thursday, but remains up about 31% for the year. Brent crude, the international standard for pricing, rose 43 cents to $101.01 a barrel.
Investors got an encouraging update on the job market on Thursday. The US Labor Department reported that fewer Americans applied for unemployment benefits last week as layoffs remained at historically low levels.
In currency trading, the dollar rose from 123.97 yen to 124.04 Japanese yen. The euro rose from $1.0861 to $1.0868.
AP Business Writers Damien J. Trois and Alex Veiga contributed.