Asian stock markets witnessed an uptick on Wednesday, following Wall Street’s recovery from its third consecutive monthly drop since the onset of the COVID-19 pandemic. Investors worldwide are now focusing their attention on the upcoming Federal Reserve’s decision on interest rates and updates on the U.S economy’s health.
Japan’s Nikkei 225 index led the charge with a 2.4% rise to 31,601.65, following the Bank of Japan’s decision to maintain its near-zero interest rate policy and adjust controls on government bond yields. As a result, the dollar weakened against the Japanese yen, trading at 151.28 yen.
Hong Kong’s Hang Seng index saw a slight rise of less than 0.1%, ending at 17,126.70, while Shanghai Composite index gained 0.1%, closing at 3,023.08. South Korea’s Kospi advanced by 1% to 2,301.56 and Australia’s S & P/ASX 200 rose by 0.9% to end at 6,838.30.
In Europe, futures were higher early Wednesday as inflation fell sharply to 2.9% in October due to falling fuel prices and rapid interest rate hikes from the European Central Bank. However, investors showed concern as economic output in the Eurozone shrank by 0.1% in Q3.
On Tuesday, Wall Street indices rallied with the S&P 500 increasing by 0.6% to reach 4,193.80, the Dow Jones Industrial Average adding 0.4% to end at 33,052.87, and the Nasdaq composite climbing by 0.5%, finishing at 12,851.24.
Despite ending October with a loss of 2.2%, over 80% of stocks in the S&P 500 strengthened. Pinterest (NYSE: PINS) and Arista Networks (NYSE: ANET) reported stronger than expected profits for the latest quarter, pushing their stock prices upward. Conversely, Caterpillar (NYSE:CAT) saw its stock sink by 6.7% after analysts pointed out a slowdown in orders and growing inventories at dealers.
The 10-year Treasury yield rose slightly early Wednesday to 4.91% from 4.89% late Monday. The Federal Reserve has already pushed its main overnight interest rate above 5.25%, the highest level since 2001. Future actions will be data-driven, with inflation and job market conditions playing a key role.
Mixed economic reports on Tuesday revealed that growth in wages and benefits for U.S. workers slowed during the summer, less than economists predicted. Consumer confidence also dipped last month, but not as much as anticipated.
In other trading news, U.S. benchmark crude oil advanced to $81.50 a barrel, while Brent crude, the international standard, increased by 65 cents to reach $85.67 a barrel. The euro fell slightly to $1.0570 from $1.0575.
