TOKYO — (AP) — Asian shares rose on Tuesday, encouraged by gains in U.S. stocks after some weak economic data raised hopes that the Federal Reserve may give up on aggressive interest rate hikes.
Japan’s benchmark Nikkei 225 was up 2.8 percent at 26,959.25 in afternoon trade. The KOSPI rose 2.5 percent to 2,209.98.
Australia’s S&P/ASX 200 rose 3.8% to 6,699.30 after the RBA raised its benchmark interest rate to a nine-year high of 2.6% for the sixth consecutive month. The Reserve Bank of Australia raised the cash rate by 25 percentage points less than at its most recent monthly meeting.
The bank raised interest rates by 25 percentage points at its May board meeting, the first rate hike in more than 11 years. It is now at its highest point since August 2013, when the bank cut interest rates to 2.5% from 2.75%.
Hong Kong and Shanghai markets were closed for holidays.
“Asian stocks rose after a correction on Tuesday as traders focused on potentially oversold market conditions,” ActivTrades’ Anderson Alves said in a note.
Wall Street surged to its best day in months on Monday amid a broad relief rally after some surprisingly weak economic data raised the odds that the Fed won’t have to raise interest rates so aggressively.
The S&P 500 rose 2.6% to 3,678.43, its biggest gain since July, the latest move in a fragmented market that has mostly fallen this year on fears of a possible global recession.
The Dow Jones Industrial Average rose 2.7% to 29,490.89 and the Nasdaq Composite added 2.3% to 10,815.43.
Stocks took cues from the bond market, which saw yields fall to ease some of the pressure that has plagued the market this year. The yield on the 10-year Treasury note, which helps set rates on mortgages and many other types of loans, fell to 3.62% from 3.83% late Friday. After only 1.51% at the start of the year, it rose to 4% last week.
The U.S. manufacturing report was weaker than expected, while data showed construction spending fell from July to August. That may seem frustrating, but it could mean the Fed could ease into raising interest rates to combat high inflation that is hurting household finances.
By raising interest rates, the Fed raises the cost of buying a house, car, or most other things bought on credit. The hope is to slow the economy just enough to curb the buying inflation needed to keep prices rising so fast.
The Fed has already raised its key overnight rate to a range of 3% to 3.25% from almost zero in March. Most traders expect it to be a full percentage point higher by early next year.
But with central banks around the world raising interest rates in unison, pressure on financial markets is mounting and corporate profits have weakened.
The two-year U.S. Treasury yield fell to 4.11% from 4.27% after the weaker-than-expected economic report, which is closer to expectations for Fed action.
In addition to stocks, lower interest rates have pushed up prices of everything from cryptocurrencies to gold, which suddenly looks more attractive when bonds pay less income.
Stocks of high-growth companies, especially risky or expensive investments, are most affected by changes in interest rates. Bitcoin rose on Monday as yields moderated, while tech stocks were the biggest gainers in the S&P 500. Apple and Microsoft both rose more than 3%.
The rally on Monday came despite an 8.6% drop in Tesla shares, one of the most influential stocks on Wall Street because of its huge market capitalization. The electric car maker delivered fewer cars than investors expected from July to September.
The latest news on the U.S. job market will be released on Friday. Along with the inflation report, the jobs report is one of Wall Street’s most anticipated monthly numbers.
This will be the last jobs report before the Fed’s next interest rate decision is scheduled for Nov. 11. 2. Continued strength will give the central bank more room to continue raising interest rates. Traders said the most likely move would be a fourth straight rally or as much as three-quarters of a percentage point, three times the usual move.
In energy trades, benchmark U.S. crude gained 23 cents to $83.86 a barrel. The index jumped on Monday on speculation that big oil producers could soon announce output cuts. Shares of energy-producing companies rose sharply. Exxon Mobil rose 5.3% and Chevron rose 5.6%. Brent crude, the international standard, rose 42 cents to $89.28 a barrel.
In foreign exchange trade, the dollar edged up to 144.84 yen from 144.81 yen. The euro sells for 98.28 cents, down from 98.40 cents.
Yuri Kageyama on Twitter https://twitter.com/yurikageyama
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