Asian stock markets followed Wall Street higher on Friday after two Federal Reserve officials said the US economy could avoid a recession and a news report said China could increase construction spending to boost its economy. struggling economy.
Tokyo’s main stock index gave up some of its gains following the assassination of a former Japanese prime minister, Shinzo Abe, but remained in positive territory for the day.
Shanghai, Hong Kong and Sydney also grew. Oil prices fell but remained above $100 a barrel.
Wall Street’s benchmark S&P 500 rose 1.5% on Thursday after Fed interest rate-setting panelist James Bullard said a “soft landing” in the economy was the most likely scenario. Another panel member, Christopher Waller, said “recession fears are overblown.”
“Investor fears of recession have diminished,” ING’s Robert Carnell and Iris Pang said in a report.
The Nikkei 225 in Tokyo rose 0.6% to 26,654.15 midday after a gunman shot Abe during a campaign event in the western Japanese city of Nara. The index was up 1.4% before the attack.
Abe, who oversaw an economic stimulus effort dubbed Abenomics, resigned as prime minister in 2020.
The Shanghai Composite Index rose 0.2% to 3,370.28 after Bloomberg News reported that China may add 1.5 trillion yuan ($220 billion) to public works construction spending this year to stimulate economic growth. The Hang Seng in Hong Kong added 0.2% to 21,694.17.
Seoul’s Kospi rose 0.9% to 2,346.14 and Sydney’s S&P-ASX 200 rose 0.6% to 6,689.30.
The Indian Sensex opened 0.5% to 54,462.63. The New Zealand and Southeast Asian markets grew.
On Wall Street, the S&P 500 rose to 3,902.62 for its fourth daily gain. About three-quarters of the stocks in the index gained.
The Dow Jones Industrial Average rose 1.1% to 31,384 and the Nasdaq composite rose 2.3% to 11,621.35.
Investors fear that aggressive interest rate hikes in the United States and Europe to quell inflation, which is at its highest level in four decades, could derail global economic growth.
Bullard, who is chairman of the Federal Reserve Bank of St. Louis, said “it would make a lot of sense” to raise the U.S. central bank’s key interest rate by three-quarters of a percentage point, or triple from the usual margin, at its meeting this month. This would repeat the dramatic rate hike in mid-June, the Fed’s largest in 28 years.
Waller, speaking at a separate event, said he also backed a 0.75 percentage point hike. He said the Fed could risk “causing economic damage,” but with a strong labor market, that shouldn’t be too big a deal.
The US government is due to release June jobs data.
On Thursday, official data showed the number of Americans applying for unemployment benefits topped the 230,000 mark for the fifth week in a row. It was the highest level in almost six months.
Bloomberg News reported that China’s Ministry of Finance is considering a plan for local governments to raise funds through the sale of bonds to spend on building roads and other public works.
It was unclear whether this represented additional spending or whether it was future bond sales to help support economic growth, which some forecasters said near zero in the quarter ending June after virus checks shut down Shanghai and other industrial hubs.
Markets were also jittery over Russia’s invasion of Ukraine, which sent oil and other commodity prices skyrocketing.
European markets gained on Thursday after British Prime Minister Boris Johnson announced his resignation following a series of departures from his cabinet by members of his Conservative party.
In energy markets, benchmark U.S. crude rose 29 cents to $103.02 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $4.20 to $102.73 on Thursday. Brent crude, the price basis for international trade, gained 78 cents to $105.43 a barrel in London. It advanced from $3.96 the previous session to $104.65.
The dollar fell to 135.55 yen from 136.11 yen on Thursday. The Euro fell slightly to $1.0150 from $1.0156.