Markets

Asian markets are mostly up, as a weak yen boosts Japan’s Nikkei

TOKYO — Asian stocks were mostly higher on Wednesday, boosted by a rally on Wall Street that came ahead of some potentially market-shattering reports due later in the week.

A weak yen has also boosted buying sentiment in Japan, as it boosts domestic exporters’ earnings when converting foreign profits into yen.

Japanese rapper Nikkei 225 NIK,
+0.97%
rose 1% in morning trading. Australia’s S&P/ASX 200 KSJO,
+0.98%
gained almost 1% and the South Korean Kospi 180721,
+0.39%
increased by almost 0.2%. Hang Seng HSI in Hong Kong,
+1.23%
rose 1%, while the Shanghai Composite SHCOMP,
+0.11%
added 0.2%. Benchmarks in Taiwan I9999,
-0.41%,
Malaysia FBMKLCI,
+0.06%
and Indonesia JAKIDX,
-0.51%
fell, while stocks rose on the Singapore STI,
+0.30%.

Shares of Fast Retailing Co. 9983,
+0.98%,
which operates popular Japanese clothing retailer Uniqlo, rose 1.4% in morning trade after the company announced it was raising wages for its workers by up to 40%.

The move is aimed at “significantly strengthening investment in personnel, compensating each employee according to their ambitions and talents, as well as increasing the company’s potential for growth and competitiveness in line with global standards,” the company said in a statement.

On Wall Street, the S&P 500 SPX,
+0.70%
it rose 0.7% to 3,919.25 after swinging between small gains and losses throughout the day. Dow Jones Industrial Average DJIA,
+0.56%
gained 0.6% to 33,704.10, and the Nasdaq Composite COMP,
+1.01%
increased by 1% to 10,742.63.

The stock market had a positive start to 2023, buoyed by hopes that cooling inflation and a slowing economy could persuade the Federal Reserve to moderate the rate hikes that are roiling markets. The Fed has been raising rates at a furious pace since early last year to bring painful inflation under control. Such moves risk triggering a recession and threatening investment prices.

Investors were hoping for some clues about where the Fed was headed from its chairman, Jerome Powell, who spoke at a forum in Stockholm on Tuesday. But he gave little news on rates.

The next big event for the markets is likely to be Thursday’s update on December US consumer inflation. Economists expect it to show that price growth has slowed further, to 6.5% from 7.1% in November and from a peak of more than 9% in the summer.

The worse-than-expected reading could dash hopes building on Wall Street that the Fed could soon halt its hikes and perhaps even cut rates by the end of the year. Some investors see the economy successfully walking the tightrope of slowing enough to quell high inflation, but not enough to cause a painful recession.

Past rate hikes and high inflation have already hurt economic activity around the world, and the Fed has pledged to keep rates high for some time to ensure the job is done on inflation. It does not foresee a rate cut until 2024.

The World Bank announced in its annual report on Tuesday that the global economy will come “dangerously close” to recession this year.

It usually takes some time for a rate increase to be fully felt in the economy. That could push the recession into the second half of the year, said Barry Bannister, chief equity strategist at Stifel. The global economy could also benefit from the strengthening in China as it lifts restrictions aimed at keeping COVID-19 at bay, but it is also hurting its economy.

“You’re looking at a pretty good six months where things will be better on the margins, and then the problems start to rear their head,” Bannister said.

Meanwhile, major U.S. companies will start showing investors later this week how much profit they made during the final three months of 2022. Hot inflation has squeezed shoppers’ wallets and driven up costs for businesses, threatening their earnings.

In energy trading, the US crude oil benchmark CLG23,
-1.01%
sank 65 cents to $74.47 a barrel in electronic trading on the New York Stock Exchange. It rose 49 cents to $75.12 a barrel on Tuesday. Brent oil BRNH23,
-0.94%,
international standard, lost 65 cents to $79.45 a barrel.

In currency trading, the US dollar USDJPI,
+0.04%
rose to 132.52 Japanese yen from 132.13 yen.

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