Asian stocks rise as Wall Street on track to end losing streak

TOKYO (AP) — Asian benchmarks mostly rose on Thursday as investor optimism benefited from a rally on Wall Street that is on track to snap a three-week losing streak.

Japan’s benchmark Nikkei 225 jumped nearly 2.0% in morning trade to 27,964.16. Australia’s S&P/ASX 200 gained 0.8% to 6,783.80. The South Korean Kospi edged up 0.4% to 2,385.55. Hong Kong’s Hang Seng fell 0.3% to 18,986.70, while the Shanghai Composite rose nearly 0.1% to 3,248.76.

Somewhat reassuring to market watchers, Japan’s seasonally adjusted real gross domestic product, or GDP, for the second quarter, which was revised up to an annual growth rate of 3.5%, higher to the original estimate of 2.2%.

The data showed that private consumption and business spending are holding up in the world’s third-largest economy, which has managed to grow for three straight quarters. Quarterly GDP growth, or the sum of the value of a country’s goods and services, has been revised up from 0.5% to 0.9%. The annual figures show how the economy would have grown if the quarterly rate were to hold for a year.

“Economic conditions in the region will continue to be the focus, with China’s trade balance data yesterday revealing both external and domestic demand challenges,” said Yeap Jun Rong, market strategist at IG at Singapore, referring to Wednesday’s Chinese data.

Investors are also watching what might happen on interest rates at the European Central Bank meeting, as well as comments from US Fed Chairman Jerome Powell later Thursday.

On Wall Street, the S&P 500 rose 1.8%, its biggest single-day gain in four weeks, with about 95% of stocks in the benchmark index closing higher. The Dow Jones Industrial Average rose 1.4% and the tech-heavy Nasdaq climbed 2.1%. Small company stocks outperformed the broader market, driving the Russell 2000 Index up 2.2%.

The indices are now all in the green for the week, a welcome respite for traders after a slump in recent weeks that wiped out much of the market’s gains following a rally in July and early August.

Wall Street watchers have warned that the market is likely to experience greater volatility in the coming weeks ahead of the Federal Reserve’s next interest rate policy update scheduled for September 21.

“It’s nice that there’s a bullish day, but I would caution anyone against being too optimistic right now,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “You don’t have a lot of reasons for that.”

Wall Street remains focused on the highest inflation in decades and the Fed’s attempt to contain it with high interest rates. The central bank has already hiked rates four times this year and markets expect them to deliver another whopping three-quarters of a percentage point hike at their next meeting in two weeks.

The central bank has been clear on its determination to keep raising rates until it senses inflation is stabilizing or slowing. In June, Fed officials forecast the benchmark rate to reach a range of 3.25% to 3.5% by the end of the year and about half a percentage point higher in 2023.

“We’re here for as long as it takes to bring inflation down,” Fed Vice Chairman Lael Brainard said Wednesday at a banking industry conference. “Our determination is firm, our objectives are clear and our tools are up to the task.”

Traders recouped some of their recent losses with Wednesday’s rally, which pushed the S&P 500 up 71.68 points to 3,979.87. The Dow gained 435.98 points to 31,581.28 and the Nasdaq gained 246.99 points to 11,791.90. The Russell 2000 climbed 39.68 points to 1,832.

Tech stocks and retailers made strong gains. Intuit increased by 3.9%. Target rose 4.4% after announcing it was lowering the mandatory retirement age for its CEO position, allowing CEO Brian Cornell to stay on for three more years.

United Airlines rose 5.5% after raising its revenue forecast after a busy summer season. The encouraging update has helped several competitors to take off. American Airlines rose 5.1% and Delta Air Lines added 3.3%.

Bond yields fell. The 10-year Treasury yield, which influences interest rates on mortgages and other loans, fell to 3.27% from 3.34% on Tuesday evening. The two-year Treasury yield, which tends to track expectations for Fed action, fell to 3.45% from 3.51%.

In energy trading, benchmark U.S. crude added 74 cents to $82.68 a barrel. US crude oil prices fell 5.7% on Wednesday. Brent crude, the international standard, gained 68 cents to $88.68 a barrel.

In currency trading, the US dollar rose slightly to 143.97 Japanese yen from 143.74 yen. The euro was little changed at $1.00.

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AP Business Writers Damian J. Troise and Alex Veiga and AP Economics Writer Christopher Rugaber contributed to this story.

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

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