Asian shares mostly up after rally on Wall Street | Health, Medicine and Fitness

Investors seem to have become more convinced that the The Federal Reserve can moderate his aggressive interest rate hikes aimed at controlling inflation after the Commerce Department reported The US economy shrank at an annual rate of 0.9% in the last quarter. That followed a 1.6% year-over-year drop in the first quarter.

Investors were wary of regional tensions over China’s stance on Taiwan after President Joe Biden and Xi Jinping of China he spoke for more than two hours on Thursday. China left no doubt that it blames the US for the deterioration in the relationship, but the White House said the aim of the call was to “responsibly manage our differences and work together where our interests align.”

Hong Kong’s Hang Seng Index fell 2.3% to 20,148.90 and the Shanghai Composite Index declined 0.7% to 3,258.86 after China’s leaders acknowledged the struggling economy it will miss its official growth target of 5.5% this year.

The announcement after a ruling Communist Party planning meeting on Thursday said Beijing would try to shore up falling consumer demand but stick to strict anti-COVID-19 tactics that have disrupted manufacturing and trade. He underlines the high cost that the Xi government is willing to incur to stop the virus in a politically sensitive year in which he is expected to try to extend his term in power.

Japan’s benchmark Nikkei 225 index lost 0.3% to 27,750.17, while Australia’s S&P/ASX 200 gained 0.8% to 6,947.30. South Korea’s Kospi added 0.4% to 2,446.22.

Japanese government data showed factory output in June rose 8.9% from the previous month, marking the first increase in three months. The recent relaxation of pandemic lockdowns in China has helped boost Japanese production.

“On the economic data front, China’s easing of restrictions also led to stronger-than-expected June output for Japan, and China’s reopening could have a positive impact across the region in the second half of the year as well.” year,” Yeap said. Jun Rong, Market Strategist at IG in Singapore.

A spike in COVID-19 infections to record levels in many parts of Japan has raised concern. But Robert Carnell, regional head of Asia-Pacific research at ING believes Japan’s second-quarter GDP, or gross domestic product, will recover marginally from the first-quarter contraction.

On Thursday, the S&P 500 rose 1.2% to 4,072.43, while the Dow added 1% to close at 32,529.63. The Nasdaq gained 1.1% to 12,162.59. The Russell 2000 rose 1.3% to 1,873.03.

Consecutive quarters of falling GDP are an informal, though not definitive, indicator of what economists call a technical recession.

The GDP report pointed to weakness throughout the economy. Consumer spending slowed as Americans bought fewer goods. Business investment fell. Inventories fell as companies cut back on shelf restocking, shedding 2 percentage points of GDP.

The Federal Reserve has made slowing the US economy to control the highest inflation in 40 years its goal by raising interest rates, most recently on Wednesday. The latest GDP report, coupled with other recent weak economic data, could be giving some investors confidence that the central bank will be able to reduce the size of any further rate hikes.

In a research note on Thursday, Jonathan Golub, chief US equity strategist at Credit Suisse Securities, said: “Academics will debate whether or not we are in a recession in the coming months. However, today’s report unequivocally reflects a substantial weakening in economic activity and increases the likelihood of a dovish turn by the Federal Reserve.”

The central bank raised its key short-term interest rate by 0.75 percentage point on Wednesday, raising it to the highest level since 2018. The move sparked a broad market rally led by tech stocks that helped the Nasdaq gain its Biggest gain in more than two years. . Major indices are now on track for a weekly gain, extending Wall Street’s strong July rally.

In a busy week of corporate earnings reports, investors have focused on what companies are saying about inflation and the impact rising interest rates are having on their businesses and customers.

Technology stocks and retailers, restaurant chains and other companies that rely on direct consumer spending helped boost the S&P 500 on Thursday. Microsoft rose 2.9%, Target gained 3.1% and McDonald’s added 1.8% more.

Communication services stocks were the only laggards. Meta Platforms fell 5.2% after the social media giant said its revenue fell last quarter for the first time, dragged down by a drop in ad spending.

Spirit Airlines shares jumped 5.6% after JetBlue said agreed to buy the low-cost airline for $3.8 billion to create the fifth largest airline in the country. A day earlier, Spirit’s attempt to merge with Frontier Airlines failed. Frontier Airlines jumped 20.5%.

In energy trading, benchmark US crude gained 25 cents to $97.28 a barrel in electronic trading on the New York Mercantile Exchange. It lost 84 cents to $96.42 on Thursday.

Brent crude, the international price standard, rose 3 cents to $101.86 a barrel.

In currency trading, the US dollar fell to 133.24 Japanese yen from 134.27 yen on Thursday night. The euro was $1.0220, inching up from $1.0199.

AP business writer Alex Veiga contributed.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama