On Tuesday, Asian stocks mainly climbed as markets shifted their focus away from the US Federal Reserve and towards earnings and economic data. Regional markets also benefited from hints that China-US ties are improving, as the two countries pledged to collaborate to improve economic connections, particularly commerce and trade.
US Commerce Secretary Gina Raimondo said Monday that she and her Chinese counterpart agreed to share information on US export controls and create a working group to tackle other commercial concerns. This raises the prospect of bilateral contact, but other disputes exist, including those concerning technology, security, and human rights.
In afternoon trade, Japan’s benchmark Nikkei 225 rose 0.4% to 32,287.46. Toyota shares originally fell when all of its vehicle assembly lines in Japan, totaling 28 lines in 14 factories, were shut down due to a malfunction with its computer system that handles incoming auto parts. However, the majority of the losses were recovered in afternoon trade. Toyota spokesperson Sawako Takeda said the business does not believe the problem is the result of a hack, but that the reason is still being investigated. It is unknown when the lines will be restored. Toyota refused to say which models would be affected by the shutdowns.
The S&P/ASX 200 index in Australia rose 0.5% to 7,197.50. The Kospi in South Korea rose 0.3% to 2,551.54. The Hang Seng in Hong Kong increased by 2% to 18,498.18, while the Shanghai Composite increased by 1.1% to 3,133.55. The S&P 500 gained 27.60 points, or 0.6%, to 4,433.31. The benchmark index is still on course to end the month in the red. The Dow Jones Industrial Average increased by 213.08 points, or 0.6%, to 34,559.98, while the Nasdaq Composite increased by 114.48 points, or 0.8%, to 13,705.13.
Companies are completing their most recent round of earnings reports, which have mostly exceeded analysts’ forecasts. Nonetheless, the S&P 500’s total earnings have shrunk by around 4% as a result of sustained inflation. Some of the larger shops reporting results this week include Best Buy, Costco, and Dollar General. 3M rose 5.2% after rumors that the firm had agreed to a $5.5 billion settlement over defective earplugs, which was less than expected. Boston Scientific surged 6% after providing an upbeat update on a cardiac device research.
Investors face a busy week ahead, with a slew of data releases that might give further insight on whether the labour market continues strong and inflation remains low. The most recent statistics might give additional hints as to whether the Fed will leave interest rates unchanged or raise them again before the end of the year. On Tuesday, Wall Street will receive an update on consumer confidence, which rose strongly in July and is projected to stay high in August. The government will release its July data on job opportunities on Tuesday, followed by its August jobs report on Friday. The job market is being examined intently since it has stayed healthy despite increasing inflation.
On Thursday, investors and analysts will be paying careful attention to the government’s latest inflation data. The Fed’s favoured gauge for reining down inflation to 2% is the report on consumer consumption and expenditures. Inflation grew at a 3% annual pace in June, according to the PCE data, and it is likely to rise slightly to 3.3% in July. It has fallen from a high of 7% a year ago.
In order to combat excessive inflation, the central bank has already hiked its main interest rate to its highest level since 2001. This was an increase from almost nothing early last year. The Fed maintained rates constant at its most recent meeting, but has not ruled out further rate rises to combat persistent inflation.
According to CME’s FedWatch tool, Wall Street expects the Fed to keep interest rates unchanged at its September meeting. However, bets on whether it will hike rates again before the end of 2023 are roughly evenly split.
Powell stated on Friday that future choices will be dependent on what incoming data reports on the economy reveal.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.