Asian shares rally after Wall Street logs rare winning week

By ELAINE KURTENBACH
AP Business Writer

BANGKOK (AP) — Asian shares advanced Monday after Wall Street ended a rare winning week, capped by a 3.1% gain on Friday for the benchmark S&P 500. U.S. futures and oil prices also were higher.

Optimism over China’s progress in controlling coronavirus outbreaks, as schools and businesses reopen, was also fueling buying, analysts said.

Stocks climbed last week as pressure from rising Treasury yields let up somewhat and investors speculated the Federal Reserve may not have to be as aggressive about raising interest rates as earlier thought as it fights to control inflation. That gave Wall Street a reprieve from its recent tumbles.

Hong Kong’s Hang Seng index led regional gains, surging 2.5% to 22,249.47, while the Nikkei 225 in Tokyo gained 1.5% to 26,886.36. In South Korea, the Kospi climbed 1.8% to 2,408.17.

Australia’s S&P/ASX 200 added 1.9% to 6,704.30 while the Shanghai Composite index rose 0.8% to 3,377.90.

The futures for the S&P 500 and Dow industrials were 0.1% higher.

Markets seemed unfazed by the possibility that Russia may have defaulted on its foreign debt for the first time since the 1917 Bolshevik Revolution, further alienating the country from the global financial system amid its war in Ukraine.

Russia faced a Sunday night deadline to meet a 30-day grace period on interest payments originally due May 27. But it could take time to confirm a default.

Positive news about inflation helped push stocks in New York higher on Friday, but the boost to sentiment may prove ephemeral, “largely because the downward trend for equity indices remains intact and we have seen previous instances of a single event pertaining to inflation, economic outlook and central banks’ policies bringing back market jitters and reversing dip-buying sentiments,” Jun Rong Yeap of IG said in a commentary.

The S&P 500 notched a 6.4% gain for the week, erasing the brutal loss it took a week earlier, though it’s still close to 20% below its record set early this year. On Friday, it gained 116.01 points to 3,911.74

The Dow Jones Industrial Average rose 2.7% to 31,500.68, while the tech-heavy Nasdaq ended 3.3% higher, at 11,607.62.

Smaller company stocks also rallied. The Russell 2000 rose 3.2% to 1,765.74.

To beat down punishingly high inflation, central banks are raising interest rates and taking other measures that hurt prices for investments and could slow the economy enough to cause a recession.

But pressure from rising Treasury yields has abated somewhat as investors speculate the Federal Reserve might be able to take a lighter touch in raising interest rates than earlier thought.

A report on Friday confirmed sentiment among American consumers sank to its lowest point since the University of Michigan began keeping records, hurt in particular by high inflation. Other data suggest the U.S. manufacturing and services sectors aren’t as strong as economists thought.

That’s helped yields in the Treasury market recede.

The yield on the 10-year Treasury, the bedrock for the world’s financial system, rose to 3.16% from 3.07% late Thursday. But it also has moderated after recently hitting 3.48%. It started the year just a bit above 1.50%.

A separate economic report on Friday showed sales of new homes unexpectedly accelerated last month. But the trend for housing has largely been downward because it’s at the leading edge of the Fed’s hikes.

More expensive mortgage rates are hurting the industry, and a separate report earlier this week showed sales of previously occupied homes slowed last month.

In other trading, the price of U.S. benchmark crude oil rose 5 cents to $107.67 per barrel in electronic trading on the New York Mercantile Exchange. It gained $3.35 on Friday to $107.62.

Brent crude oil, the pricing standard for international trading, gained 10 cents to $109.20 per barrel.

The dollar slipped to 134.95 Japanese yen from 135.11 yen on Friday. The euro edged higher, to $1.0560 from $1.0554.