Asian indices up as Wall St ticks higher amid rate-cut hopes

Tokyo: Asian shares mostly advanced on Wednesday after Wall Street ticked higher amid hopes that Japan’s moves to keep interest rates easy for investors could augur similar trends in the rest of the world. US futures rose while oil prices were virtually unchanged after two days of gains. Building on gains from Tuesday, Tokyo's Nikkei 225 index surged 1.4 per cent to reach 33,675.94 despite Japan experiencing a slight decline in its export performance for the first time in three months in November, a worrisome slowdown for the world's third-largest economy. Exports to China, Japan's biggest single market, fell 2.2 per cent, while shipments to the US rose 5.3 per cent from a year earlier. Total imports fell nearly 12 per cent.

Hong Kong's Hang Seng index added 0.7 per cent to 16,613.79 while the Shanghai Composite index lost 0.8 per cent to 2,909.26 after China kept its benchmark lending rates unchanged at the monthly fixing on Wednesday. The S&P/ASX 200 in Sydney gained 0.7 per cent to 7,537.90, while South Korea's Kospi was 1.8 per cent higher to 2,613.44. Bangkok's SET rose 0.5 per cent, and India's Sensex climbed 0.3 per cent. On Wall Street, the S&P 500 rose 0.6 per cent to 4,768.37, just 0.6 per cent shy of its record set nearly two years ago. The Dow Jones Industrial Average gained 0.7 per cent to 37,557.92, setting a record for a fifth straight day, while the Nasdaq composite climbed 0.7 per cent to 15,003.22. Enphase Energy jumped 9.1 per cent for the biggest gain in the S&P 500 after the maker of microinverters for the solar industry told employees it will cut 10 per cent of its global workforce and make other streamlining changes.

Stocks of oil-and-gas companies also pushed the market higher after crude prices recovered some of their sharp drops from recent months. The S&P 500 has rallied more than 15 per cent since late October on hopes that a similar, easier approach to interest rates may soon be arriving on Wall Street. With inflation down from its peak two summers ago and the economy still growing, the rising expectation is for the Federal Reserve in 2024 to pivot away from its campaign to hike interest rates dramatically. The hope is the Fed can pull off what was earlier seen as a nearly impossible tightrope walk, by first getting inflation under control through high interest rates and then cutting rates before they push the economy into a recession.

A report on Tuesday showed the housing industry appears to be in stronger shape than expected. Homebuilders broke ground on many more homes in November than expected, roughly 200,000 more at a seasonally adjusted annualized rate. Wall Street's big recent moves also have critics saying the rally looks overdone. Some Fed officials have been sounding more cautious about the prospect for rate cuts since Powell's comments last week.

On Friday, for example, the president of the Federal Reserve Bank of New York said it was “premature to be even thinking” about whether to cut rates in March. In the bond market, the yield on the 10-year Treasury slipped to 3.92 per cent from 3.94 per cent late Monday. It was above 5 per cent in October, at its highest level since 2007 and putting tremendous downward pressure on the stock market.

Elsewhere on Wall Street, shares of Tylenol maker Kenvue rose 2.2 per cent following a favourable ruling for it in federal court. The company wanted to exclude the opinions of experts in a multijurisdictional against it on whether in-utero exposure to acetaminophen, the pain reliever used in Tylenol, could lead to autism or attention deficit disorder. Judge Denise Cote of US District Court for the Southern District of New York agreed with Kenvue, ruling Monday that the testimony was inadmissible.

In other dealings, US benchmark crude oil added 15 cents to $74.09 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 6 cents to $79.29 per barrel.