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TOKYO (AP) – Asian stocks were mostly higher Tuesday as investors focused on the latest indicators on U.S. inflation.
Japan’s benchmark Nikkei Stock Average rose 2.2% in morning trading to 37,723.62. Australia’s S&P/ASX 200 index rose nearly 0.1% to 7,619.20. South Korea’s Kospi rose 1.2% to 2,651.33. Trading was suspended in China, Hong Kong and Taiwan due to the Lunar New Year holiday.
Japan’s producer price index data showed a 0.2% year-on-year increase, although flat month-on-month.
“This modest figure may suggest that the pass-through to consumer prices is still limited, potentially giving the Bank of Japan room to continue on a wait-and-see approach for now. is expected to occur only in April 2024,” said IG market analyst Yep Jun Long.
After the most recent record-setting week, Wall Street remained relatively stable. The S&P 500 fell 4.77 points, or 0.1%, to 5,021.84 on Monday, after closing above the 5,000 level for the first time on Friday.
Most index constituents rose, but losses at Microsoft and other tech companies weighed on the index.
The Nasdaq Composite Index fell $48.12, or 0.3%, to 15,942.55, due in part to weakness in tech stocks. Earlier in the day, it was trading just above the all-time closing price set in 2021. Meanwhile, the Dow Jones Industrial Average rose $125.69, or 0.3%, to $38.797.38, setting a new record.
Overall market conditions were calm and bond market yields were stable. The next big event for markets could be the release of an update on U.S. inflation on Tuesday, with economists expecting inflation to fall below the 3% level.
The seven largest companies accounted for a disproportionate share of the S&P 500’s record rise, raising concerns about how top-heavy the stock market has become. Criticism that the market is too expensive could be allayed if more companies, beyond the group known as the Magnificent Seven, can achieve strong profit growth.
Another market concern is uncertainty about how much risk to the economy lies in the commercial real estate loans and other assets banks have on their balance sheets.
There is a widespread expectation, even among U.S. government officials, that a downturn in office buildings and other commercial projects will mean at least some pain for banks. But no one can say for sure how much.
That’s why it’s getting so much attention new york community bancorp recently. Two weeks ago, it shocked investors by announcing a surprise loss for its latest quarter. Some of the pain was due to its acquisition of Signature Bank during the industry’s mini-crisis last year. But concerns about commercial real estate also played a role.
New York Community Bancorp’s stock price has roughly halved since that surprising news, but was a little more stable on Monday. The stock fell 0.2%.
The index showing stock prices for the local banking industry as a whole rose 1.8%.
In the bond market, yields were little moved. The 10-year U.S. Treasury yield fell to 4.16% from 4.18% as of late Friday.
The yield on the two-year Treasury note, which more accurately reflects expectations from the Federal Reserve, held at 4.48% as of late Friday.
Inflation has cooled down enough federal reserve He hinted that key interest rates could be cut several times this year. These rate cuts typically energize financial markets and the economy, releasing pressure that has built up since the Fed raised its key interest rate to its highest level since 2001.
Traders had previously expressed hope that interest rate cuts could begin as early as March, but have since pushed back their expectations to May or June. Reports indicating that the U.S. economy and job market remain extremely strong, as well as comments from Federal Reserve officials, have forced the postponement.
If the Fed ends up making traders wait longer than expected to cut interest rates, stocks that were already soaring on the assumption of a lot of good news could drop, said Mark DiSard, chief investment strategist at PNC Asset Management Group. It can be upsetting. In addition to lower interest rates, this includes strong confidence that the U.S. economy will not enter a recession, continued declines in inflation, and stronger corporate profit growth.
“There’s nothing better than what actually works,” he said.
In energy trading, benchmark U.S. crude rose 3 cents to $76.95 per barrel. Brent crude, the international standard crude, rose 1 cent to $81.99 per barrel.
In foreign exchange trading, the dollar rose from 149.30 yen to 149.40 yen. The euro fell from $1.0774 to $1.0767.
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AP Business Writer Stan Cho contributed.
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