Shares were mostly higher Monday in Asia after strong data on the US economy sent Wall Street to its best close in six weeks. Hong Kong's Hang Seng index edged less than 0.1 per cent higher to 20,576.11 and the Shanghai Composite index lost 0.2 per cent to 3,320.42.
At the annual session of China's rubberstamp legislature, the government set this year's economic growth target at “around 5 per cent ” as it tries to rebuild business activity following the end of anti-virus controls that kept millions of people at home. Chinese leader Xi Jinping has said the priority is an economic revival based on consumer spending after growth sank to 3 per cent last year, its second-lowest level since at least the 1970s. But officials who briefed media Monday about economic planning did not provide fresh or specific policy initiatives to attain that goal.
“The slower-than-expected GDP growth target set by the government of around 5 per cent matches our GDP forecast of 5 per cent for this year,” ING said in a commentary. “The government realises that a weakening external market would impose challenges to China's export-related industries.”
Tokyo's Nikkei 225 gained 1.2 per cent to 28,253.60 and the Kospi in Seoul added 1.1 per cent to 2,458.88. The S&P/ASX 200 in Australia added 0.6 per cent to 7,325.20 and shares rose in Taiwan. Thailand's markets were closed for a national holiday. On Friday, the S&P 500 rose 1.6 per cent to cap its first winning week in the last four as relaxing yields in the bond market took some pressure off Wall Street. It's found some stability following a swift rise and fall to start the year.
The Dow Jones Industrial Average climbed 387 points, or 1.2 per cent, while the Nasdaq composite jumped 2 per cent. Markets have been fluctuating amid uncertainty over where inflation is heading and what the Federal Reserve will do about it. Wall Street rallied earlier in the year on hopes that cooling inflation would get the Fed to take it easier on its hikes to interest rates. Such increases can drive down inflation by slowing the economy, but they also raise the risk of a recession later on and hurt prices for investments.
Last month, stocks fell after reports on the economy came in hotter than expected. They included data on the jobs market, consumer spending and inflation itself at multiple levels. The strong data raised concerns about continued upward pressure on inflation. That forced Wall Street to abandon hopes for rate cuts this year and raise its expectations for how high rates would go.
But data released Friday that showed the economy is in better shape than thought was taken as a good sign, calming worries about a possible recession even if it could add to pressure on inflation. The yield on the 10-year Treasury fell Monday to 3.94 per cent, extending its decline from 4.06 per cent late Thursday. It's a respite from its shot higher over the last month as expectations rose for a firmer Fed.
The next move by the Fed on interest rates is scheduled for later this month. Before then, reports on the strength of the job market and on inflation will likely have big impacts on the market and expectations for what the Fed will do. Last month, it dialled down the size of its rate increases and highlighted progress being made in the battle to get inflation lower. It also earlier suggested just two more increases to rates may be on the way. But the strong reports since then have raised worries that the Fed could not only hike at least three more times but also could dial back up the size of the increases.
In other trading Monday, US benchmark crude lost 77 cents to USD 78.92 per barrel in electronic trading on the New York Mercantile Exchange. It gained USD 1.52 to USD 79.68 per barrel on Friday. Brent crude, the international pricing standard, lost 76 cents to USD 85.07 per barrel. The dollar fell to 135.64 Japanese yen from 135.98 yen late Friday. The euro rose to USD 1.0647 from USD 1.0626.