Asian shares rise on Wall St rally

The S&P 500 climbed 0.8 per cent, closing at 4,263.75. The Dow added 0.4 per cent to 33,129.55 and the Nasdaq jumped 1.4 per cent to 13,236.01

Tokyo: Asian shares advanced on Thursday after a plunge in oil prices aided a recovery on Wall Street.

Benchmarks rose in Tokyo, Sydney and Hong Kong. Trading was closed in Shanghai for a holiday. Market sentiment was helped by a $5 decline in oil prices on Wednesday, although prices recovered slightly in Asian trading. Lower energy costs would relieve inflationary pressures that have led central banks to keep interest rates high. Japan’s benchmark Nikkei 225 jumped 1.8 per cent to finish at 31,075.36. Sydney’s S&P/ASX 200 gained 0.5 per cent to 6,925.50, while South Korea’s Kospi was little changed, inching down less than 0.1 per cent to 2,405.10. The Hang Seng index in Hong Kong gained 0.4 per cent to 17,261.20. In energy trading, benchmark US crude added 30 cents to $84.52 a barrel.

It fell $5.01 to settle at $84.22 per barrel on Wednesday in its biggest drop in just over a year. It was hovering near $70 a barrel and has been pulling back since topping $93 last week. Brent crude, the international standard, gained 37 cents to $86.18. Oil prices fell after the Energy Information Administration reported a 4.6 million barrel increase in commercial petroleum products.

Inventories of gasoline rose to above average. The S&P 500 climbed 0.8 per cent, closing at 4,263.75. The Dow added 0.4 per cent to 33,129.55 and the Nasdaq jumped 1.4 per cent to 13,236.01. Stocks have struggled since the summer under the weight of soaring Treasury yields in the bond market. High yields undercut stock prices by pulling investment dollars away from stocks and into bonds. They also crimp corporate profits by making borrowing more expensive. The yield on the 10-year Treasury, which is the centre piece of the bond market, pulled back from its highest level since 2007, down to 4.71 per cent early Thursday from 4.80 per cent late Tuesday. Shorter- and longer-term yields also eased to allow more oxygen for the stock market. Yields fell following a couple reports indicating a slowing economy. The first suggested hiring by employers outside the government was much weaker last month than expected.

On Wall Street, that’s currently good news because a cooling job market could mean less upward pressure on inflation. That in turn could convince the Federal Reserve to take it easier on interest rates. After already hiking its main interest rate to the highest level since 2001, the Fed has indicated it may keep its overnight rate higher next year than it had earlier expected. Treasury yields have correspondingly snapped higher as traders accept a new normal for markets of high rates for longer. The Fed is paying particular attention to the job market because too much strength there could drive wages for workers much higher, which it fears could keep inflation well above its target of 2 per cent. Wednesday’s report from ADP suggested private employers added 89,000 jobs last month, a much sharper slowdown in hiring than the 140,000 that economists expected.

The report doesn’t have a perfect track record in predicting what the more comprehensive jobs report from the US government will say. That will arrive on Friday. A second report on the economy said growth in US services industries slowed in September by a touch more than economists expected. Wall Street is also absorbing the ouster of Kevin McCarthy as the speaker of the House of Representatives.

The unprecedented move likely doesn’t change much in the short term, with funding for the US government set until November 17.