Asian shares were higher Monday after Wall Street closed its third straight winning week with a tiny gain.
U.S. futures were lower while oil prices gained as investors looking ahead to OPEC plus meetings.
Japan’s Nikkei 225 index broke its September peak, hitting a 33-year high, and then fell to 33,388.03, shedding 0.6%.
The Hang Seng in Hong Kong added 1.5% to 17,719.07, and the Shanghai Composite index advanced 0.4% to 3,066.85. China announced on Monday that it would keep its benchmark lending rates unchanged as expected due to a weaker yuan and the need to assess the impact of recent stimulus measures on the economy.
In South Korea, the Kospi was 1% higher, at 2,495.60. Australia’s S&P/ASX 200 edged 0.1% higher to 7,058.40. Taiwan’s Taiex was little changed. The SET in Bangkok gained 0.2% as the state planning agency announced Monday that Thailand’s economy grew slower than expected in the last quarter due to weakness in exports and agriculture, despite strong consumer spending and a recovery in tourism.
On Friday, the S&P 500 edged up 0.1% to 4,514.02 and is near its highest level in three months. The Dow Jones Industrial Average inched up less than 0.1% to 34,947.28 and the Nasdaq composite gained 0.1% to 14,125.48.
Several retailers made strong gains after reporting better results for the latest quarter than analysts expected. Gap surged 30.6% after reporting much higher profit than Wall Street had forecast, more than doubling its stock’s gain for the year so far. Ross Stores climbed 7.2% after reporting stronger profit and revenue than expected.
On the losing end was BJ’s Wholesale Club, which fell 4.8% despite also reporting better results than expected. Analysts pointed to an underlying sales figure that strips out the boost from store openings, which fell short of expectations.
Retailers are closing out what’s been a better-than-hoped earnings reporting season for the summer. Companies in the S&P 500 are on track to report their first overall growth in a year, according to FactSet.
More important are hopes that inflation has cooled enough for the Federal Reserve to finally stop its market-crunching hikes to interest rates.
The Fed has already raised its main interest rate to the highest level since 2001, trying to slow the economy and dent financial markets just enough to get inflation under control without causing a painful recession.
Now traders are trying to bet on when the Fed could actually begin cutting interest rates, something that can juice prices for investments and provide oxygen for the financial system. The Fed has said that it plans to keep rates high for a while to ensure that the battle against inflation is definitively won, but traders are thinking cuts could begin early in the summer of 2024.
In the bond market, the yield on the 10-year Treasury rose to 4.45% from 4.44% late Friday. Just a few weeks ago, it was above 5%, at its highest level since 2007 and undercutting prices for stocks and other investments.
Too steep a drop in Treasury yields and too big a rally in stock prices could conspire to work against Wall Street. Chair Jerome Powell said after the Fed’s last meeting on interest rates that it may not hike any more if the summer’s jump in Treasury yields and fall in stock prices remained “persistent.” That’s because such pressures could act like substitutes for more rate increases on their own.
One source of potential worry about inflation has been receding in recent weeks. Oil prices have plunged amid worries about a mismatch between too much crude supply and too little demand.
A barrel of U.S. crude for December delivery gained 69 cents to $76.73. It rose $2.99 to settle at $75.89 on late Friday, recovering some of its sharp losses from earlier in the week. But it’s still well below its perch above $93 in late September.
Brent crude, the international standard, rose 73 cents to $81.34 per barrel.
In currency trading, the U.S. dollar dropped to 149.15 Japanese yen from 149.58 yen. It had been trading near 152 yen to the dollar last week, but analysts said expectations for lower U.S. interest rates are driving sales of dollars, pushing the yen higher.
The euro cost $1.0917, rising from $1.0912.
