BANGKOK — Shares climbed in Asia on Tuesday after Wall Street benchmarks clawed back some losses from their worst week since early December.
In Hong Kong, the Hang Seng
gained 0.4% while the Shanghai Composite index
edged 0.1% higher. Australia’s S&P/ASX 200
rose 0.5%. Stocks rose in Singapore
and were little changed in Indonesia
Stocks have come under selling pressure as analysts have raised forecasts for how high the Federal Reserve will take interest rates and how long it will keep them there to tame inflation that has failed to fall as much as expected given strong jobs growth and other signs of resilience in the economy.
“As we move into ‘Turnaround Tuesday,’ investors are debating whether January’s inflation reflation was just another temporary bump in the road as the economy adjusts to a post-pandemic world,” Stephen Innes of SPI Asset Management said in a report. “The post-pandemic era continues to deliver unusual macroeconomic patterns.”
Stocks have struggled in February after a strong start to the year. Robust economic data help calm fears that a recession may be imminent given the dampening impact of more costly borrowing on spending by consumers and businesses.
But they likely mean a longer spell of higher interest rates. The heightened expectations for rates have been most evident in the bond market, where yields have shot higher in recent weeks.
Earlier, analysts thought the Fed might soon ease back. Now the expectation is that it might raise rates above 5.25%. The Fed’s key overnight rate is now in a range of 4.50% to 4.75%, up from virtually zero at the start of last year.
On Monday, the S&P 500
rose 0.3% to 3,982.24 for just its second gain in the last seven days. The Dow Jones Industrial Average
gained 0.2%, to 32,889.09, while the Nasdaq composite
climbed 0.6% to 11,466.98.
The 10-year Treasury yield dipped to 3.92% from 3.95% late Friday. That yield helps set rates for mortgages and other important loans. The two-year yield, which moves more on expectations for the Fed, slipped to 4.79% from 4.81%. It’s near its highest level since 2007.
Yields eased after a report showed that orders for machinery, aircraft and other long-lasting manufactured goods fell by more than economists expected in January.
Even Monday’s weaker-than-expected report on durable goods had some underlying strength. After ignoring transportation-related equipment, orders jumped last month to the biggest gain since March, much stronger than the drop that economists expected to see.
Even with the worries about rates going higher than expected, the S&P 500 is still holding onto a gain of 3.7% for the year so far, and shoppers are still continuing to spend at stores. Both can add upward pressure on inflation.
In other trading Tuesday, U.S. benchmark crude oil
gained 24 cents to $75.91 per barrel in electronic trading on the New York Mercantile Exchange. It shed 64 cents to $75.68 on Monday.
the pricing basis for international trading, picked up 17 cents to $82.21 per barrel.
The U.S. dollar
rose to 136.29 Japanese yen from 136.20 yen.