Asian shares mostly rose Tuesday as markets shift their attention from the U.S. Federal Reserve to earnings and economic reports.
Regional markets also got a perk from signs China-U.S. relations may be improving, as the nations agreed to work together to smooth out economic relations, including business and trade.
“This sounds more like the kind of pragmatic and decisive breakthrough that is required. The proof will be in the pudding and only time will tell, but markets are correct to respond favorably to these developments,” said Clifford Bennett, chief economist at ACY Securities.
U.S. Commerce Secretary Gina Raimondo said she and her Chinese counterpart agreed Monday to exchange information on U.S. export controls and set up a group to discuss other commercial issues. That signals possible hopes about bilateral communication, but various conflicts remain, including over technology, security and human rights.
Japan's benchmark Nikkei 225 edged up 0.4% in afternoon trading to 32,287.46.
Toyota shares initially dropped after all its auto assembly lines at its plants in Japan, or 28 lines in 14 plants, were shut down over a problem in its computer system that deals with incoming auto parts. But most of the losses were recouped in afternoon trading.
Toyota spokeswoman Sawako Takeda said the company does not think the problem is from a cyberattack, but the cause was still under investigation. It's unclear when the lines would be back up. Toyota declined to specify which models would be affected by the stoppages.
Australia's S&P/ASX 200 added 0.5% to 7,197.50. South Korea's Kospi edged up 0.3% to 2,551.54. Hong Kong's Hang Seng jumped 2.0% to 18,498.18, while the Shanghai Composite gained 1.1% to 3,133.55.
On Wall Street, the S&P 500 rose 27.60 points, or 0.6%, to 4,433.31. The benchmark index is still on track to close out August with a loss.
The Dow Jones Industrial Average rose 213.08 points, or 0.6% to 34,559.98 and the Nasdaq composite rose 114.48 points, or 0.8%, to 13,705.13.
Companies are wrapping up their latest round of earnings reports, which have mostly beaten analysts' expectations. Still, overall profits for the S&P 500 have contracted about 4% under the weight of persistent inflation.
Best Buy, Costco and Dollar General are among some of the bigger retailers that will report their results this week.
3M jumped 5.2% following reports that the company had agreed to a $5.5 billion settlement over faulty earplugs, a lower figure than expected. Boston Scientific rose 6% after giving investors an encouraging update on a study for a heart device.
Shares of Hawaiian Electric jumped 44.6% as the utility pushed back against accusations it is responsible for causing the wildfire that devastated the community of Lahaina.
Investors have a busy week ahead full of economic reports that could shed more light on whether the job market remains hot and inflation is still cooling. The latest data could provide more clues about whether the Fed is likely to hold interest rates steady or raise them again before the year closes.
Wall Street will get an update Tuesday on consumer confidence, which jumped sharply in July and is expected to remain strong in August.
The government will issue its July report on job openings on Tuesday and its broader jobs report for August on Friday. The job market is being closely watched because it has remained strong amid high inflation.
Investors and economists will be focusing closely on the government’s latest inflation update on Thursday. The report on personal consumption and expenditures is the Fed's preferred measure as it tries to rein inflation back to 2%. The PCE report showed inflation rising at a rate of 3% in June and the July report is expected to show it rose slightly to 3.3%. Overall, it’s down from a high of 7% a year ago.
The central bank has already raised its main interest rate to the highest level since 2001 in its drive to grind down high inflation. That was up from virtually zero early last year. The Fed held rates steady at its last meeting, but hasn't ruled out future rate hikes to fight persistent inflation.
Wall Street is betting that the Fed will hold rates steady again at its September meeting, according to CME’s FedWatch tool. Bets are nearly evenly split, though, on whether it will raise rates one more time before 2023 closes.
Powell on Friday said upcoming decisions will be based on what incoming data reports say about the economy.
The yield on the 10-year Treasury slipped to 4.21% from 4.24% late Friday. The yield on the 2-year Treasury, which more closely tracks expectations for the Fed, fell to 5.06% from 5.08% late Friday.
In energy trading, benchmark U.S. crude fell 4 cents to $80.06 a barrel. Brent crude, the international standard, lost 1 cent to $84.41 a barrel.
In currency trading, the U.S. dollar inched down to 146.51 Japanese yen from 146.54 yen. The euro cost $1.0828, up from $1.0823.
