As markets transfer their focus from the U.S. Federal Reserve to earnings and economic reports on Tuesday, most Asian stocks rose.Indications that China-U.S. relations may be strengthening boosted regional markets, as the two countries agreed to work together to improve economic relations, including business and trade.
“This sounds more like the required pragmatic and decisive breakthrough. The proof will be in the pudding, and only time will tell, but the markets have responded appropriately to these positive developments, according to Clifford Bennett, chief economist at ACY Securities.
Monday, U.S. Secretary of Commerce Gina Raimondo and her Chinese counterpart agreed to exchange information on U.S. export controls and establish a committee to discuss other commercial issues. This hints at the possibility of improved bilateral communication, but numerous disagreements remain, including those concerning technology, security, and human rights.
In afternoon trading, the benchmark Nikkei 225 index increased 0.4% to 32,287.46.
All of Toyota’s auto assembly lines at its Japanese plants, or 28 lines in 14 plants, were shut down due to a problem with its computer system that handles incoming auto parts. However, the majority of losses were recovered during afternoon trading.
Toyota spokeswoman Sawako Takeda stated that the company does not believe the issue is the result of a cyberattack, but that the root cause is still being investigated. It is unknown when the lines will be restored. Toyota refused to specify which models would be impacted by the production halts.
The S&P/ASX 200 in Australia rose 0.5% to 7,197.50. The South Korean Kospi rose 0.3% to 2,551.54 points. The Hang Seng rose 2.0% to 18,498.18, and the Shanghai Composite rose 1.1% to 3,133.55.
The S&P 500 rose 27.60 points, or 0.6%, to 4,433.31 on Wall Street. The benchmark index is still projected to end August in the red.
The Dow Jones Industrial Average increased by 213.08 points, or 0.6%, to 34,559.98, while the Nasdaq composite increased by 114.48 points, or 0.8%, to 13,703.
Companies are nearing completion of their most recent earnings reports, which have largely exceeded analyst expectations. Despite this, the S&P 500’s aggregate profits have decreased by about 4% due to persistent inflation.
This week, several major retailers including Best Buy, Costco, and Dollar General will release their financial results.
Following news that the company had agreed to a $5.5 billion settlement over defective earplugs, the stock of 3M increased by 5.2%. Boston Scientific gained 6% after providing investors with a positive update on a cardiac device study.
Shares of Hawaiian Electric climbed 44.6% as the utility pushed back against allegations that it was culpable for the devastating conflagration in Lahaina.
Economic Reports to Shape Fed’s Interest Rate Outlook
The upcoming week will be jam-packed with economic reports that could cast light on whether the job market and inflation remain hot or calm. The most recent data may provide additional indications as to whether the Fed will likely maintain current interest rates or raise them again before the end of the year.
Tuesday, Wall Street will receive an update on consumer confidence, which surged in July and is anticipated to remain high in August.
Tuesday will see the release of the July report on job openings, while Friday will see the release of the August employment report. The labor market is closely monitored because it has remained robust despite high inflation.
On Thursday, investors and economists will pay close attention to the government’s latest inflation report. The Fed prefers the report on personal consumption and expenditures as it attempts to reduce inflation to 2%. Inflation rose at a rate of 3% in June, according to the PCE report, and the July report is anticipated to show a minor increase to 3.3%. An entire year ago, it reached a peak of 7%.
To combat excessive inflation, the central bank has already raised its key interest rate to its highest level since 2001. This increased from essentially nothing at the beginning of last year. The Fed left interest rates unchanged at its most recent meeting, but has not ruled out future rate increases to combat persistent inflation.
According to CME’s FedWatch tool, Wall Street is wagering that the Fed will hold rates constant at its September meeting. On whether the Fed will raise rates once more before the end of 2023, however, bets are divided nearly evenly.
Powell stated on Friday that future decisions will be dependent on incoming economic data reports.
Friday night, the yield on 10-year Treasury bonds fell from 4.24 percent to 4.21 percent. The yield on the 2-year Treasury note, which more closely reflects Fed expectations, decreased to 5.06% late Friday from 5.08%.
In energy trading, the price of benchmark U.S. crude fell four cents to $80.06. Brent crude, the international benchmark, decreased by one cent to $84.41 per barrel.
The U.S. dollar fell to 146.51 Japanese yen from 146.54 yen in currency trading. The price of the euro increased from $1.0823 to $1.0828.
Source: ABC News