BEIJING – Asian shares were mostly higher Thursday as investors welcomed encouraging economic data and quarterly earnings reports from big companies.
Benchmarks rose in Tokyo, Hong Kong, Shanghai and Seoul but fell in Taiwan and India. Sydney finished flat. The gains followed a strong rally on Wall Street.
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Jitters eased somewhat over the visit of U.S. House Speaker Nancy Pelosi to Taiwan after she left for South Korea and then was due to head to Japan, firm U.S. allies for decades. But analysts said some geopolitical risks remain, with China conducting military exercises near the self-ruled island that it claims as its own territory.
“Despite the easing in immediate concerns, investors will be looking out for any potential escalation in U.S.-China tensions, with any economic sanctions from China likely to negatively affect risk sentiment and positioning in Asian markets,” said Anderson Alves of ActivTrades.
Alves said investors are also watching U.S. nonfarm payrolls, due Friday, for indications on hiring, and how that might affect interest rate policy. But overall Pelosi's trip so far has had little impact on markets.
Japan's benchmark Nikkei 225 added 0.7% to finish at 27,932.20. Australia's S&P/ASX 200 lost earlier gains, shedding just 1 point to 6,974.90. South Korea's Kospi added 0.5% to 2,473.66. Hong Kong's Hang Seng rose 1.6% to 20,092.04, while the Shanghai Composite climbed 0.5% to 3,177.92.
India's Sensex lost 0.5% and the Taiex in Taiwan also fell 0.5%.
On Wall Street, the S&P 500 rose to 4,155.17, an almost 2-month high. The Nasdaq gained 2.6% to 12,668.16. Both indexes more than recouped losses earlier in the week. The Dow Jones Industrial Average rose 1.3% to 32,812.50. The Russell 2000 index of smaller companies ended 1.4% higher, at 1,908.93.
Technology companies, retailers and communications companies were some of the biggest winners. Only energy sector stocks fell, dragged down by lower oil prices.
Investors cheered a report on the services sector, which makes up the bulk of the U.S. economy. The sector grew faster than expected in July, according to the Institute for Supply Management. A separate report showed U.S. orders for big-ticket, durable goods increased more than expected in June.
Some weak recent data on the economy heightened speculation that the peak for inflation and for the Federal Reserve’s aggressive rate hikes may be approaching or has already passed. The weak data, though, also shows the risk of a recession as the Fed puts the brake on the economy.
That’s why Wednesday’s more positive economic reports helped put traders in a buying mood.
“That just provides people with more evidence that this economy is hanging in there,” said Jeff Buchbinder, equity strategist for LPL Financial. “At this point, we have a combination of evidence that inflation is coming down.”
The yield on the 10-year Treasury fell to 2.71% from 2.73% late Tuesday.
Earnings remain in focus this week as investors parse the latest results and statements from companies to better understand how inflation is affecting businesses and consumers.
Oil prices rose following OPEC's decision to boost production in September at a much slower pace than previous months, but later fell. Benchmark U.S. crude lost 9 cents to $90.57 a barrel. On Wednesday, U.S. crude oil fell 4% to settle at $90.66 per barrel. Brent crude, the international standard, fell 18 cents to $96.60 a barrel.
Markets are also watching for potential economic fallout from China after U.S. House Speaker Nancy Pelosi’s visit to Taiwan. China claims self-ruled Taiwan as part of its territory, and banned imports of Taiwanese citrus fruits and frozen fish in retaliation for Pelosi's visit. But it has avoided disrupting the flow of computer chips and other industrial goods, a step that could jolt the global economy.
Upcoming data on the jobs market could help investors determine how the Federal Reserve will move ahead with its interest rate policy, which has been aggressive in an effort to try and tame inflation. U.S. jobless claims numbers for last week will be released Thursday, and the government issues its July jobs report on Friday.
In currency trading, the U.S. dollar edged up to 134.24 Japanese yen from 133.85 yen. The euro cost $1.0166, little changed from $1.0170.
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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama