Asian shares rise as Wall Street looks to end losing streak

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

Japan’s benchmark Nikkei 225 rose 2.3 percent to end at 28,065.28. Australia’s S&P/ASX 200 gained 1.8% to 6,848.70. South Korea’s Kospi rose 0.3 percent to 2,382.88. Hong Kong’s Hang Seng fell 0.8 percent to 18,897.29, while the Shanghai Composite fell 0.2 percent to 3,239.64.

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

The data showed private consumption and business spending holding back 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, was revised upwards to 0.9% from 0.5%. The annual numbers show how the economy would have grown if the quarterly pace had continued for a year.

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

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

On Wall Street, the S&P 500 rose 1.8 percent, its biggest one-day gain in four weeks, with about 95 percent of the benchmark’s stocks closing higher. The Dow Jones Industrial Average rose 1.4 percent and the tech-heavy Nasdaq rose 2.1 percent. Shares of smaller companies beat the broader market, leading the Russell 2000 index 2.2% higher.

Indices are now all in the green for the week, a welcome respite for traders after a slump in recent weeks that erased much of the market’s gains from a rally in July and early August.

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

“It’s good to have a bullish day, but I would caution anyone not to be too bullish right now,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “You don’t have much reason for that.”

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

The central bank has been clear about its determination to keep raising interest rates until it senses inflation leveling off or cooling. In June, Fed officials predicted that the benchmark rate would 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 in it for as long as it takes to get inflation down,” Fed Vice Chairman Lael Brainard told a banking industry conference on Wednesday. “Our resolve is firm, our goals are clear, and our tools are up to the task.”

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

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

In energy trading, benchmark U.S. crude rose 66 cents to $82.60 a barrel. US crude oil prices fell 5.7% on Wednesday. Brent crude, the international standard, gained 58 cents to settle at $88.58 a barrel.

In currency trading, the US dollar rose to 143.60 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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