TOKYO – Asian shares were mostly higher Thursday as Wall Street and global markets wait for a highly anticipated speech from the U.S. Federal Reserve chair about interest rates at the end of the week.
Benchmarks rose in Japan, Australia and South Korea. Trading was delayed in Hong Kong for a storm, while Shanghai shares inched up but were virtually unchanged in morning trading.
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Market watchers say share prices were likely to sway for some time, regardless of whether the focus was on controlling inflation or recession risks. In Asia, a wait-and-see mood has set in over the recent sessions, as markets wait for signs from the Fed.
Chinese shares have declined this week, amid recent policy rate cuts from the People’s Bank of China, which has also announced policies to try to stimulate the economy.
“Market participants may want to see a more consistent recovery as a gauge of policy success before confidence is lifted,” said Yeap Jun Rong, market strategist at IG in Singapore.
Japan's benchmark Nikkei 225 edged up 0.5% in morning trading to 28,460.60. Australia's S&P/ASX 200 gained 0.8% to 7,052.40. South Korea's Kospi rose 0.8% to 2,467.09. The Shanghai Composite was little changed at 3,215.77. Trading in Hong Kong was delayed because of a storm.
On Wall Street, the S&P 500 edged up 12.04 points, or 0.3%, to 4,140.77, as traders overall again held off on making big moves. The Dow Jones Industrial Average added 59.64, or 0.2%, to 32,969.23, and the Nasdaq composite rose 50.23, or 0.4%, to 12,431.53.
It was the second straight day of modest moves for the market, but they follow some severe swings up and down over the prior weeks.
Stocks drove higher through the summer on hopes that inflation was near its peak and that the Federal Reserve may hike interest rates less aggressively than earlier feared. But recent comments by Fed officials have cooled such expectations, sending Wall Street on Monday to its worst day in months. Discouraging reports on the economy have meanwhile highlighted the risk of a recession.
Wall Street’s focus remains centered on Friday, when Fed Chair Jerome Powell gives a speech at an annual economic conference in Jackson Hole, Wyoming. It’s been the setting for market-moving speeches in the past, which has investors hoping Powell will offer clarity on further rate hikes. Will he be hawkish, which is what traders call a bias toward aggressive rate increases? Or dovish, which is Wall Street-speak for easier conditions?
Brian Jacobsen, senior investment strategist at Allspring Global Investments, doesn't expect Powell to be clearly one or the other.
“I don’t think he wants to come across as hawkish or dovish, maybe he wants to come across as chicken,” Jacobsen said, citing the many variables that could change the Fed’s thinking before its next meeting on rate policy in September.
Jacobsen warned the speech may be a “nothingburger” with little to chew on, though the market could take that as a positive given some expectations for Powell to sound hawkish.
Higher interest rates slow the economy in hopes of undercutting inflation. But they also risk choking off the economy if done too aggressively, and they pull down prices on all kinds of investments.
Treasury yields have been rising recently, partly in anticipation of the Fed continuing to lean toward raising rates aggressively to quash the worst inflation in decades. The two-year yield, which tends to track expectations for the Fed, rose to 3.40% from 3.30% late Tuesday.
The 10-year yield, which helps set rates for mortgages and many kinds of loans, rose to 3.11% from 3.05% after a report showed that U.S. orders for long-lasting goods were flat in July. Excluding transportation, though, growth was stronger than economists expected.
In the stock market, Intuit rallied 3.6% for one of the larger gains in the S&P 500. The owner of TurboTax delivered stronger-than-expected results for the latest quarter and forecast revenue for the upcoming fiscal year that topped some analysts’ expectations.
On the losing end were several retailers, which are among the last companies to report how much profit they made during the spring.
Nordstrom tumbled 20% after it cut its financial forecast for the year, though it reported stronger profit for the latest quarter than expected. It’s the latest major retailer to say it’s struggling to keep up with its customers' changing shopping patterns.
Shoppers are shifting their spending away from stores and toward travel and other experiences. The ones still coming through the doors are seeing their buying power undercut by high inflation, with pressure hitting lower-income customers in particular. That has the industry facing mountains of unsold inventory.
Advance Auto Parts slumped 9.6% after its quarterly results fell short of expectations. The car parts chain said its do-it-yourself customers are getting squeezed by high inflation and gasoline prices well above where they were a year ago.
In energy trading, benchmark U.S. crude rose 72 cents to $95.61 a barrel. Brent crude, the international standard added 77 cents to $101.99.
In currency trading, the U.S. dollar fell to 136.74 Japanese yen from 137.09 yen. The euro was little changed at 99 cents.
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AP Business Writer Stan Choe contributed.
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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama