Asian markets rally after Wall Street logs rare winning week

BANGKOK — Asian shares advanced Monday after Wall Street ended a rare winning week, capped by a 3.1% gain on Friday for the benchmark S&P 500. US futures and oil prices were also higher.

Optimism over China’s progress in controlling coronavirus outbreaks, as schools and businesses reopen, was also fueling buying, analysts said.

Stocks climbed last week as pressure from rising Treasury yields let up somewhat and investors speculated the Federal Reserve may not have to be as aggressive about raising interest rates as earlier thought as it fights to control inflation. That gave Wall Street a reprieve from its recent tumbles.

Hong Kong’s Hang Seng index HK:HSI
led regional gains, surging 3.1%, while the Nikkei 225 JP:NIK
in Tokyo gained 1.3%. In South Korea, the Kospi KR:180721
climbed 1.9%.

Australia’s S&P/ASX 200 AU:XJO
added 1.9% while the Shanghai Composite index CN:SHCOMP
rose 0.9%. Stocks slipped in Indonesia ID:JAKIDX
but gained in Singapore SG:STI
and Taiwan TW:Y9999,

Futures for the S&P 500 ES00
were 0.3% higher while those for the Dow industrials YM00
were up 0.2%.

Markets seemed unfazed by the possibility that Russia might default on its foreign debt for the first time since the 1917 Bolshevik Revolution, further alienating the country from the global financial system amid its war in Ukraine.

Russia faces a Sunday night deadline to meet a 30-day grace period on interest payments originally due May 27. But it could take time to confirm a default.

Positive news about inflation helped push stocks in New York higher on Friday, but the boost to sentiment may prove ephemeral, “largely because the downward trend for equity indices remains intact and we have seen previous instances of a single event pertaining to inflation, economic outlook and central banks’ policies bringing back market jitters and reversing dip-buying sentiments,” Jun Rong Yeap of IG said in a commentary.

The S&P 500 SPX
notched a 6.4% gain for the week, erasing the brutal loss it took a week earlier, though it’s still close to 20% below its record set early this year. On Friday, it gained 116.01 points to 3,911.74

The Dow Jones Industrial Average DJIA
rose 2.7% to 31,500.68, while the tech-heavy Nasdaq comp
ended 3.3% higher, at 11,607.62.

To beat down punishingly high inflation, central banks are raising interest rates and taking other measures that hurt prices for investments and could slow the economy enough to cause a recession.

But pressure from rising Treasury yields has abated somewhat as investors speculate the Federal Reserve might be able to take a lighter touch in raising interest rates than earlier thought.

A report on Friday confirmed sentiment among American consumers sank to its lowest point since the University of Michigan began keeping records, hurt in particular by high inflation. Other data suggest the US manufacturing and services sectors aren’t as strong as economists thought.

That’s helped yields in the Treasury market recede. The yield on the two-year Treasury, which tends to move with expectations for the Fed’s actions, dropped back to 3.06% from more than 3.40% in the middle of last week.

The yield on the 10-year Treasury, the bedrock for the world’s financial system, rose to 3.13% on Friday from 3.07% late Thursday. But it also has moderated after hitting 3.48% last week.

It started the year just a bit above 1.50%.

A separate economic report on Friday showed sales of new homes unexpectedly accelerated last month. But the trend for housing has been largely downward because it’s at the leading edge of the Fed’s hikes.

More expensive mortgage rates are hurting the industry, and a separate report earlier this week showed sales of previously occupied homes slowed last month.

In other trading, the price of US crude crude oil CLQ22
rose 51 cents to $108.13 per barrel in electronic trading on the New York Mercantile Exchange. It gained $3.35 on Friday to $107.62.

Brent crude oil BRNQ22,
the pricing standard for international trading, gained 56 cents to $109.67 per barrel.

The dollar USDJPY
slipped to 134.90 Japanese yen from 135.11 yen on Friday.

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