Asia shares up as sentiments boosted by Fed minutes, US jobs

TOKYO (AP) — Global shares mostly rose Thursday following a rally on Wall Street as investors assessed minutes from the Federal Reserve’s latest meeting of policymakers and welcomed encouraging data on U.S. jobs.

France’s CAC 40 lost 0.6% to 6,736.01 in early trading, while Germany’s DAX fell 0.4% to 14,438.94. Britain’s FTSE 100 edged up 0.1% to 7,595.23. U.S. shares were set to drift higher with Dow futures up 0.3% to 33,389.00. S&P 500 futures rose 0.5% to 33,389.00.

Worries over China’s economic slowdown were weighing on Asian regional sentiment.

Japan’s benchmark Nikkei 225 rose 0.4% to finish at 25,820.80. Australia’s S&P/ASX 200 edged up nearly 0.1% to 7,063.60. South Korea’s Kospi added 0.4% to 2,264.65. Hong Kong’s Hang Seng jumped 1.3% to 21,052.17, while the Shanghai Composite gained 1.0% to 3,155.22.

India’s Sensex declined 1%.

Widespread COVID-19 cases in China have added to gloom over a long-term slump in its property sector and over the impact of pandemic restrictions that were only recently loosened as the virus gained ground in the worst nationwide outbreak so far.

“Retail sales in general should be weaker in December compared to the prior month,” said Robert Carnell, regional head of research Asia-Pacific at ING. He said demand might bounce back during the Lunar New Year later in the month.

“After the long holiday, there could be even more daily COVID cases, and then another quiet month for retail. The road to recovery may not be smooth for retailers,” he said.

On Wall Street, the S&P 500 rose 0.8% Wednesday and the Dow Jones Industrial Average advanced 0.4%. The Nasdaq composite added 0.7% while the Russell 2000 index gained 1.2%.

The U.S. government will release its weekly unemployment report on Thursday and its closely watched monthly employment report, for December, on Friday. Strong jobs numbers are seen as an indication of inflationary pressures that support further interest rate increases by the Federal Reserve.

But layoffs have been mounting in the technology sector, which is dealing with falling demand as inflation squeezes consumers.

The Fed raised its key short-term interest rate last month for the seventh time in 2022 and signaled more hikes to come. The increase was smaller than those from the previous four meetings, reflecting signs that inflation, while still high, has been easing.

The minutes from the mid-December meeting show Fed officials remained determined to keep rates high, taking little comfort from inflation’s decline from a peak of 9.1% in June to 7.1% in November.

The Fed’s benchmark lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year. It has forecast that the rate will reach a range of 5% to 5.25% by the end of 2023 and it isn’t calling for a rate cut before 2024.

Investors have had their eyes on the Japanese yen, because investors don’t expect Japan’s superlow rates to continue, even as rates are rising in other nations.

“Even though the BoJ warned that this doesn’t mean that a rate hike is imminent, the BoJ won’t be able to maintain rates below zero while rates are soaring elsewhere. Sooner or later, the BoJ will hike, and that’s enough for traders to pile into the yen, which has been the worst performing major currency last year,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

In currency trading, the U.S. dollar fell to 132.51 Japanese yen from 132.56 yen. The euro cost $1.0621, up slightly from $1.0610.

In energy trading, benchmark U.S. crude rose $1.87 to $74.72 a barrel in electronic trading on the New York Mercantile Exchange. It dropped $4.09 on Wednesday. Brent crude, the international pricing standard, rose jumped $1.93 to $79.77 a barrel. U.S. crude oil settled 5.3% lower on Wall Street.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama