Asia shares up as sentiments boosted by Fed minutes, US jobs

TOKYO Asian shares are mostly higher after a rally on Wall Street as Wall Street investors evaluated minutes from the Federal Reserve’s most recent meeting of policymakers, and welcomed encouraging data about U.S. job growth.

Worries over China‘s economic slowdown were weighing on regional sentiment.

Japan’s benchmark Nikkei 225 rose 0.9% in morning trading to 25,943.93. Australia’s S&P/ASX 200 edged up 0.1% to 7,068.60. South Korea’s Kospi added 0.6% to 2,268.29. Hong Kong’s Hang Seng jumped 2.3% to 21,274. 44, while the Shanghai Composite gained 0.6% to 3,143.63.

” Despite the positive close on Wall Street, the fade in earlier gains and muted moves at the U.S. Equity futures this morning are driving more measured upside for the Asia session,” Yeap Jun Rong (IG market analyst) said in a report.

The government will release its weekly unemployment data on Thursday, and its closely-watched monthly employment report for December on Friday. Inflationary pressures are indicated by strong jobs numbers, which can be interpreted as a sign that further Federal Reserve interest rate increases are possible.

Widespread COVID-19 cases in China have added to gloom over a long-term slump in its property sector and over the impact of pandemic restrictions that were only recently loosened as the virus gained ground in the worst nationwide outbreak so far.

“Retails sales should be lower in December than the previous month,” said Robert Carnell (ING’s regional head for research Asia-Pacific). He suggested that demand could rebound during the Lunar New Year later on in the month.

” After the holiday, there may be more COVID cases per day, and then another quiet period for retail. He said that retailers may face challenges on the road to recovery.

Major indexes rallied after a government report showed that job openings rose more than expected in November. Stocks lost some of their gains following the minutes of the Fed meeting last month, which showed how determined the central bank is to keep rates high to curb inflation.

The S&P 500 rose 0.8% to 3,852. 97, with more than 80% of shares notching gains. The Dow Jones Industrial Average rose 0.4% to 33,269. 77, and the Nasdaq composite added 0.7% to 10,458.76. Small company stocks outpaced the broader market, lifting the Russell 2000 index 1.2% to 1,772.54.

Banks and companies that rely on consumer spending, as well as communications stocks, accounted for a large portion of the rally. Citigroup rose 2.6%, Starbucks gained 3.6%, and Netflix gained 4.9%.

The Fed raised its key short term interest rate last month for a seventh time in 2022, signaling more increases to come. This was a sign that inflation, although still high, is slowing down.

The minutes of the mid-December meeting showed that Fed officials were determined to keep rates high despite inflation’s fall from 9.1% in June and 7.1% in November. The Fed’s benchmark lending rates are at a range between 4. 25% to 4.5%, up from close to zero following seven increases last year. It forecasts that the rate will range from 5% to 5. 25% by the end of 2023 and it isn’t calling for a rate cut before 2024.

Layoffs are increasing in the technology sector which is struggling to keep up with inflation and falling demand.

Investors rejoiced at several companies that had to reduce staff due to lower demand. Cloud computing software company Salesforce rose 3.6% after it announced it was laying off about 10% of its workforce. Vimeo, a video hosting platform, saw a 4% increase after it reportedly informed workers about job cuts.

In energy trading, benchmark U.S. crude rose 85 cents to $73. 79 a barrel in electronic trading on the New York Mercantile Exchange. It fell $4. 09 on Wednesday. Brent crude, the international pricing standard, rose 77 cents to $78. 61 a barrel. The U.S. crude oil price was 5.3% lower at Wall Street.

In currency trading, the U.S. dollar fell to 131. 87 Japanese yen from 132. 56 yen. The euro cost $1. 0620, up slightly from $1.0610.

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AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama